U.S. Weighs Immunity for Enron Officials' Testimony
By Susan Schmidt
Washington Post Staff Writer
Wednesday, February 27, 2002; Page A06
The Justice Department is evaluating offers of cooperation from several former Enron employees who may be knowledgeable about the controversial off-the-books partnerships that contributed to the company's demise, sources familiar with the investigation said.
A number of former employees, including some who worked with Andrew S. Fastow, Enron's chief financial officer and architect of the partnerships, have sought to become witnesses in exchange for immunity from prosecution, the sources said. Prosecutors have not accepted any of those overtures, the sources said.
Among those who offered information to the government is former Enron treasurer Ben F. Glisan, who could provide important evidence. Glisan worked closely with Fastow to devise deals between the partnerships and Enron, and Glisan had a secret stake in one partnership that made him $1 million on a $5,800 investment.
While prosecutors have not entered into negotiations with Glisan, sources said, Justice Department officials have asked congressional investigators to refrain from calling him as a witness in their own investigation of the Enron bankruptcy. Congressional aides routinely confer with the department about witnesses, and Glisan is so far the only one Justice has asked them to not call.
Prosecutors are focused on selecting the right witnesses to guide them through Enron's complex partnership deals. They are likely to offer immunity or plea deals to some people in exchange for information and testimony. Of central interest are the roles of Fastow, former chairman Kenneth L. Lay and former chief executive Jeffrey K. Skilling.
Calling a witness before Congress could complicate the government's use of him or her as a cooperating witness down the road. If witnesses were to cite their constitutional right against self-incrimination and refuse to testify, that might later tarnish them in the eyes of a jury. Equally worrisome to prosecutors is having a witness's congressional testimony undercut by more fully developed information that surfaces in the course of the criminal probe.
Preserving the viability of potential cooperating witnesses is especially important in the Enron investigation, lawyers involved in the case said. It could be difficult to bring charges against any Enron officials without the help of company insiders because defense lawyers will be able to cite approvals of the partnership deals by legal and accounting professionals.
Capitol Hill aides confirmed that the Justice Department has asked them not to call Glisan as a witness. "We have had discussions with the Justice Department about Mr. Glisan, but I can't comment on those talks because there is an ongoing criminal investigation," said Ken Johnson, a spokesman for the chairman of the House Energy and Commerce Committee. "While we believe Mr. Glisan has vitally important information, we have not offered him immunity to testify before our committee."
Prosecutors may be especially dependent on Enron officials to determine whether there is a case to be made against Skilling, since he does not appear to have been a party to the self-dealing from the partnerships that Fastow and members of his team engaged in. Skilling has told Congress he believed that the partnerships served a legitimate purpose in helping Enron manage cash flow. He has disputed the contention they were created to conceal debt and pump up the value of the company's stock.
At the same time federal investigators are seeking to develop their cases, Congress is determined to conduct its own probe. Some key Enron players have refused to testify, among them Fastow and three people who worked with him in his division, Enron Global Finance: division vice president Michael Kopper, chief accounting officer Richard Causey and chief risk officer Richard Buy.
Fastow's attorney, John Keker, is known for his ability as a trial lawyer rather than as a dealmaker. Keker did not return calls for comment on his client's status with the Justice Department. Kopper's attorney had no comment.
Sherron Watkins, the Enron vice president who warned then-chairman Lay that Enron was in danger of imploding in a "wave of accounting scandals," has been formally told she is not a target in the Justice probe. Watkins has testified twice before Congress, including an appearance yesterday before the Senate Commerce Committee panel.
A law enforcement source said Watkins asked for and received a "non-target letter" from prosecutors. In testimony, she has acknowledged selling Enron stock after she became aware of the company's accounting irregularities, which could be viewed as insider trading by the Securities and Exchange Commission.
The Justice Department and regulators are also investigating Enron's accounting firm, Arthur Andersen, for its role the company's collapse and for the shredding of Enron documents as the company's troubles came to the attention of authorities last fall.
David B. Duncan, who was Andersen's lead auditor on the Enron account, has met twice with the Justice Department's Enron task force. So far he has not entered into any deal with prosecutors. His lawyer, Robert Giuffra Jr., said prosecutors are evaluating Duncan's credibility while deciding whether to enter into a cooperation agreement with him.
"It's unlikely they will do any deals for months," he said.
An article in yesterday's New York Times said Glisan is "cooperating" and providing investigators with "information and evidence," though it noted that no "final decision" had been made about a deal. Some defense lawyers said that revelation could cause other potential cooperating witnesses to rush into the arms of prosecutors. "It's just a shakedown," one said.
Law enforcement officials confirmed that Glisan and his attorney, Washington lawyer Henry Schuelke, have offered information, as have a number of other Enron employees who could face charges. But the department is in a "holding pattern" on making any deals. Schuelke was unavailable for comment.
Glisan was briefly interviewed by lawyers who conducted an investigation for Enron's board of directors. He was named Enron's treasurer in the spring of 2000, succeeding Jeffrey McMahon, who moved on after complaining that the job was rife with conflicts of interest.
An investigation commissioned by Enron's board after the company's collapse found that Glisan was a central participant in two huge partnership transactions that required the company to dramatically restate its earnings last fall.
Glisan and lawyer Kristina Mordaunt earned $1 million each on their $5,800 investments in Southhampton Place, an Enron-affiliated partnership, as did three other officials in the global finance unit, the report said.
© 2002 The Washington Post Company
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KLP, my hunch is the head Justice Dept. Prosecuter (from San Francisco) is not fooling around...she and her team are quickly moving up the food chain at Enron and it seems like Mr. Glisan could become a star witness. My hunch is she is methodically putting together a case against the top execs at Enron (Lay, Skilling, Fastow, and possibly others)....I sure wouldn't bet against her -- she has successfully prosecuted high profile white collar criminals and mafia bosses before. The stakes are higher here. Corporate America will be watching what happens to the former Enron Execs. If they are guilty of breaking the laws, then they should pay a big price.
-Scott |
