Enron Faces Congressional Tax Probe
Wednesday January 16 8:34 AM ET
By CURT ANDERSON, AP Tax Writer
WASHINGTON (AP) - Enron Corp.,
which led a lobbying campaign to
repeal a corporate tax as it neared
collapse, will undergo scrutiny in
Congress of its own tax returns to
determine if shelters or other
practices may have concealed its
financial condition.
Repeal of the alternative minimum
tax sought by Enron was included
by President Bush (news - web
sites) in an economic stimulus
package and passed by the House,
which added a provision that would
have given Enron a $254 million
infusion of cash. The package
ultimately failed.
Now, Senate Finance Committee
investigators are ``interested in
whether Enron has been
complying with federal tax laws'' said the panel's
spokesman, Mike Siegel.
Whether Enron used any shelters viewed by the
Internal Revenue Service (news - web sites) as set up
mainly to avoid paying taxes is one key point. Sen.
Charles Grassley of Iowa, the top committee
Republican, said the issue is ``whether Enron used
certain tax vehicles that might have masked the
company's financial condition.''
Enron, the Houston-based energy conglomerate, faces
investigations from a growing list of congressional
committees, the Justice Department (news - web sites)
and the Securities and Exchange Commission (news -
web sites) following its collapse late last year in the
nation's biggest corporate bankruptcy. The Finance
Committee is one of two congressional panels with
access to Enron's tax records.
Even as its failure loomed last fall, Enron maintained a
high-profile lobbying effort on a variety of tax issues.
Enron led the AMT Coalition for Economic Growth, a
business group dedicated to repeal of the corporate
alternative minimum tax, which is intended to
guarantee that companies pay at least a minimal
amount of income taxes.
Bush also pushed for repeal in his economic stimulus
package, arguing that the provision hits corporations
hardest in down years.
The administration disclosed Tuesday that Enron
Chairman Kenneth Lay+ telephoned Mitch Daniels,
director of the White House Office of Management and
Budget, in early October to discuss prospects for
passage of the stimulus measure.
The two had a general conversation about the
legislation and discussed the overall outlook for the
economy, said OMB spokeswoman Amy Call. Repeal of
the alternative minimum tax was not addressed, she
said.
Enron stood to gain handsomely from language added
to the stimulus package by Rep. Bill Thomas, R-Calif.,
chairman of the House Ways and Means Committee.
Under the original House-passed bill, billions of
dollars in alternative minimum tax credits built up
over past years by dozens of corporations would have
been immediately redeemed - handing Enron a $254
million infusion of cash.
Several corporate lobbyists say Enron was focused on
prospective repeal of the tax, not the immediate refund
of past credits. Thomas endured fierce criticism from
Democrats for proposing the refunds, which he
contended would enable struggling corporations to
hire more people or boost investments. Other
companies, including IBM and General Motors, would
have gotten much larger refunds than Enron.
David Wyss, chief economist at Standard & Poor's Co.
in New York, said in any event the money would have
done little to help Enron overcome its sinking credit
rating and sliding stock price.
``Maybe they could have staved off bankruptcy for
another month,'' Wyss said. ``But it would not have
solved their problem.''
Senate Democrats blocked the Republican stimulus
package. A second version, again passed by the House
and endorsed by Bush, did not include the alternative
minimum tax repeal or the immediate refund.
Enron sought numerous other tax breaks from
Congress, according to lobbyist disclosure records.
Among them was a five-year extension of a tax credit
for electricity generated by wind; Enron is a major
producer of wind-generated power.
An Enron affiliate, Enron Wind, provided a sample
letter on its Internet site that people could send to
members of Congress advocating extension of the
credit.
Like the stimulus package, however, extension of the
wind credit failed to clear Congress and expired on
Dec. 31. Lawmakers of both parties say it will be
renewed for at least another year and probably made
retroactive to the beginning of 2002.
Enron would also have benefited from provisions of a
House-passed energy bill involving oil and gas
transmission lines, including tax breaks for certain
transmission transactions. Those items would have
helped the bottom lines of many other companies, too - and the bill also
languishes in the Senate.
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