Enron 'bribed tax officials'(FROM BBC.COM)
A crucial report into the collapse of disgraced energy giant Enron has discovered the firm's executives bribed tax officials.
The energy giant - once the US' seventh largest firm - paid no income tax between 1996 and 1999 according to the investigation by the Senate Finance Committee.
The report reads like a conspiracy novel
Charles Grassley
The outraged committee's chairman, Charles Grassley, described a week-long programme of wining and dining, tennis, fishing and golf as part of Enron's strategy to get its own way.
Mr Grassley also said the report called into serious doubt the ethics of tax advisers and the "desperate" bankers, accountants and lawyers who helped Enron.
"The report reads like a conspiracy novel, with some of the nation's finest banks, accounting firms and attorneys working together to prop up the biggest corporate farce of this century," he said.
The investigation provides the first complete story of Enron's efforts to manipulate its taxes and accounting.
The findings of the investigation, which have been kept tightly under wraps until now, have been described by senators as "eye-popping", "disturbing", and "barn-burning".
Need to reform
Enron's bankruptcy was the first in a wave of scandals that swept across corporate America, transforming attitudes towards companies.
Enron's failure destroyed the retirement savings of thousands of employees and hurt individual investors and pension funds across the world.
Enron places the spotlight again on the general ineffectiveness of the current law
Lindy Paull
Taxation committee
Experts now expect broad reform of corporate tax law in the US, an area not previously tackled in the aftermath of the Enron scandal.
Mr Grassley said the report read like a roadmap of how to abuse the tax system, but promised to ensure that such abuse could not be repeated.
"Enron places the spotlight again on the general ineffectiveness of the current law," Lindy Paull, who led the taxation inquiry, said.
The collapse of Enron was particularly shocking because its accounts made the firm appear to be healthy and prosperous.
And lawmakers have been scrambling to ensure the deception cannot happen again.
IRS overwhelmed?
The Finance Committee's ranking Democrat Max Baucus said Enron "overwhelmed the Internal Revenue Service (IRS) with the complexity" of its transactions.
"The IRS really couldn't figure it out even if it tried," Mr Baucus said.
Mr Baucus said that Enron repeatedly abused the tax code, while the IRS was "kept in the dark and out-manoeuvered".
But Ms Paull and Mr Grassley also stressed that some tax officials must have been deliberately collaborating with Enron.
Guilty parties?
The BBC's New York business correspondent, Stephen Evans, says the big question is who the senators will implicate in the deception.
Introducing the report, Mr Grassley referred to a "jaw-dropping" amount of benefits paid to Enron executives while ordinary employees were left high and dry.
The benefit system also came under fire from Ms Paull, who specifically referred to the perks received by senior staff which included a share in a jet plane.
Kenneth Lay: refused to testify
Kenneth Lay, Enron's former chairman and chief executive, maintained his silence when he appeared before the committee. He has not yet been charged.
Andrew Fastow, the former chief financial officer, has pleaded innocent to 78 counts of fraud, money-laundering, conspiracy and other charges.
But other company employees have alleged that the top executives knew about the damaging schemes being hatched in the finance department.
Evidence from the report today may also give federal prosecutors new leads in their battle to weave together a case against Enron.
It is now 18 months since the accounting black hole was first revealed, but the complexity of the case has slowed legal proceedings. |
