Enron 'bribed tax
officials'
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 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.
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.
The report said Enron profited from 12 large
tax deals from 1995 to 2001 that saved the
corporation more than $2bn.
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, 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.
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