Committees take steps to subpoena former Enron chairman
WASHINGTON (AP) — Congressional committees took steps Monday to subpoena Enron’s no-show former chairman, while the Justice Department rejected a Democratic call for a special prosecutor to investigate the collapse of his energy-trading company.
Former chairman Kenneth Lay was to have been the star witness at congressional hearings this week, but he abruptly backed out Sunday night.
The Senate Commerce Committee scheduled a vote Tuesday on a subpoena to force Lay’s appearance. Rep Michael Oxley, R-Ohio, said the House Financial Services Committee would issue a subpoena to compel Lay’s appearance “at the earliest practical date.”
Lay, who resigned as chairman on Jan. 23, quit his remaining position as a director on Monday.
“It’s not possible to figure out what caused this huge Enron ship to capsize if you can’t hear from the captain,” said Sen. Ron Wyden, D-Ore.
Sen. Ernest Hollings, D-S.C., chairman of the Senate Commerce Committee, said a special prosecutor was needed because the Bush Justice Department could not be relied on to investigate objectively.
The Justice Department said in a statement that it sees no reason to appoint a special counsel to investigate Enron. “No person involved in pursuing this investigation has any conflict, or any ties that would require a recusal,” the department said.
Attorney General John Ashcroft stepped aside from the investigation last month because he had received campaign donations from Enron in his failed 2000 Senate bid. The probe is being led by Deputy Attorney General Larry Thompson.
At the start of a weeklong series of congressional hearings, William C. Powers, an Enron director and dean of the University of Texas Law School, said his investigation into company activities found “a systematic and pervasive attempt by Enron’s management to misrepresent the company’s financial condition.”
In a related development, a former Enron worker is accusing the company of spending money in an employee benefits account on frequent payments to outside consultants. Robin Hosea, who was a former senior benefits accountant, told the “CBS Evening News” on Monday that she was suspicious of the payments and when she questioned her superiors, she was told the money was going to friends of executives and not to inquire further.
The Labor Department is investigating whether officials in charge of Enron’s retirement plans violated federal pension law when thousands of workers heavily invested in company stock lost their retirement savings in the energy giant’s collapse.
A Labor spokeswoman, Sue Hensley, said investigators have interviewed “a lot of folks,” but did not know whether Hosea was among them.
Republican lawmakers focused on Powers’ report, released over the weekend, to keep attention on allegations of wrongdoing at Enron and away from the ties between the Houston-based company and Bush administration officials.
“At root it is a corporate scandal,” Sen. Peter Fitzgerald, R-Ill., said at a news conference by members of the Senate Commerce Committee.
Fitzgerald acknowledged that Enron was a “politically active” company but noted that the Clinton administration also appeared to have helped it.
Hollings homed in on the Bush administration, declaring, “We’ve got an Enron government.” Hollings ticked off names of top Bush administration officials, some incorrectly, with ties to the company and listed benefits he said Enron received, such as loosened energy regulation.
Lay, who has been a friend of President Bush and his biggest campaign benefactor over the years, enjoyed high-quality access in Washington.
Enron spiraled downward into bankruptcy on Dec. 2. Countless small investors nationwide were burned by Enron’s stock slide, along with state pension funds. Thousands of Enron workers lost their jobs and retirement savings that were dominated by company stock.
The Securities and Exchange Commission has been pursuing a civil investigation since Oct. 31, along with a dozen congressional panels. Also being examined is the role of Arthur Andersen, Enron’s longtime auditor, which has acknowledged massive destruction of Enron-related documents.
“The public can have full confidence … that our Division of Enforcement will conduct a thorough investigation and that the SEC will redress any and all wrongdoing and wrongdoers swiftly and completely,” commission chairman Harvey Pitt testified to the Financial Services panel.
Powers, the Enron director, told lawmakers, “There’s no question that virtually everyone from the board of directors down” understood that Enron’s use of its complex web of partnerships was to “offset its investment losses with its own stock.”
Powers said there was a “default of leadership and management” that began at the top, including Lay and former Enron chief operating officer Jeffrey Skilling, while Enron’s board of directors failed to provide leadership and oversight.
Lay canceled his Senate testimony after several senators and House members suggested on Sunday news shows that he and other company executives engaged in criminal acts.
Enron’s former chief financial officer, Andrew Fastow, and ex-Enron executive Michael Kopper have indicated they will refuse to answer questions from Congress. Arthur Andersen auditor David Duncan, fired for his role in document shredding, invoked his Fifth Amendment right not to testify Jan. 24.