I've been out of the loop a bit. Did this get posted?
Ex-Enron Chief to Face Congressional Panel
Enron Partnerships Come Under Scrutiny
By MARCY GORDON
.c The Associated Press
WASHINGTON (Feb. 3) - Star witness and presidential friend Kenneth Lay. Enron
employees' loss of their retirement savings. The company's intricate web of partnerships.
All come under the glare of public scrutiny this week as Congress delves into a huge
corporate failure heavy with political overtones.
''The more I've seen of this the more it smells. There's something dreadfully wrong that
happened in this corporation,'' said Sen. Byron Dorgan, D-N.D., who is leading one of the
numerous investigations.
Lay, Enron's chairman until his Jan. 23 resignation, is the builder and most powerful
symbol of the collapsed energy conglomerate. On Monday, he is expected to speak
publicly about the calamity for the first time at a hearing by the Senate Commerce
Committee.
Among the questions: Was Enron's stunning failure caused by bad luck, incompetence or
greed? Were illegal or criminal actions involved? Where were the company's directors
while this was happening? How much did they profit from it? Were they kept in the dark by
senior executives?
Minutes of Enron board meetings from late 1997 to mid-2000 show that Lay and other
directors had detailed information about the complex partnerships that kept some $500
million in debt off the company's balance sheet, hidden from investors and federal
securities regulators.
Yet Lay's wife, Linda, said recently there are some things he was not told about.
Dorgan says the company has not cooperated in providing information about the
partnerships sought by investigators. Enron's attorney in Washington disputes that, saying
the company does not have the information and it must come from the partnerships
themselves.
Meanwhile, Lay's sister, Sharon, and a son, Mark, profited from extensive business
dealings with Enron over the years, The New York Times reported Saturday.
In 1997, Enron hired Mark Lay as an executive with a three-year contract that guaranteed
him at least $1 million in salary over the period, plus options to buy thousands of shares of
Enron stock.
Enron also relied on Alliance Worldwide, a Houston travel agency co-owned by Sharon
Lay. The firm has booked more than $10 million in revenue from Enron - more than half of
the firm's business, the Times said.
Lay has been President Bush's biggest campaign benefactor over the years and enjoyed
top-shelf access in Washington. Bush, who called Lay ''Kenny Boy'' when the two were
up-and-comers in Texas, has sought to distance himself from the building financial
scandal.
Several Bush administration officials also have close ties to Houston-based Enron Corp.
Compounding the political problem, the White House recently disclosed that Lay had
contacted Bush's Treasury and Commerce secretaries and budget director in October and
November as the company foundered.
Enron slid into the biggest bankruptcy in U.S. history 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 company and its accounting practices are under investigation for possible criminal
violations by the Justice Department - which ordered Bush's staff Friday to preserve
documents relating to conversations with Enron executives about the company's interests.
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
by its employees of Enron-related documents.
David Duncan, Andersen's lead Enron auditor, invoked his Fifth Amendment right against
self-incrimination at a recent House hearing and refused to answer questions.
Lawmakers also want to know about the alleged shredding of documents at Enron's
headquarters, where FBI agents have been investigating.
Another focus is the steps Enron management took to prevent employees from selling
company stock in their 401(k) plans while the price plunged last fall. Many employees lost
70 percent to 90 percent of their retirement assets, according to the Labor Department.
Top Enron officials and directors, by contrast, cashed out more than $1 billion in company
stock when it was near its peak, lawmakers have noted. In addition, nearly 600 employees
deemed critical to Enron's operations received more than $100 million in bonuses in
November.
An estimated 3,000 partnerships, some with names of ''Star Wars'' characters like Jedi,
were created by Enron, which took a 97 percent stake in each of them. The partnerships
were kept off Enron's books and helped create the accounting debacle that pushed the
company into collapse.
Andrew Fastow, Enron's former chief financial officer, and Michael Kopper, a former Enron
executive, have indicated they will refuse to answer questions at a hearing Thursday by
the House Energy and Commerce Committee, according to a committee spokesman.
Fastow, who has been described as a mastermind behind the partnerships, made an
estimated $30 million from them, lawmakers have said.
William Powers, an Enron director who led an internal investigation of the collapse, is
expected to begin testifying Monday.
AP-NY-02-03-02 1055EST |
