Sen. Gramm's wife gets Enron subpoena
By MARK BENJAMIN AND NICHOLAS M. HORROCK
WASHINGTON, Jan. 11 (UPI) -- A Senate panel investigating energy conglomerate Enron
Corp.'s financial collapse sent a subpoena Friday to Texas Republican Sen. Phil Gramm's
wife, Wendy Gramm, panel sources confirmed.
Wendy Gramm has been a member of Enron's board of directors for eight years and of
the crucial Audit and Compliance Committee as the giant company's financial condition
was deteriorating.
Her subpoena is among 51 issued by the Senate Permanent Subcommittee on Investigations
chaired by Sen. Carl Levin, D-Mich., seeking documents from Enron, the Arthur Andersen
LLP accounting firm, and current and former officers, employees and board members
of Enron.
Of the 51 subpoenas, 49 went to individuals, one to Enron Corp. and one to the Andersen
firm seeking documents as far back as January 1999.
Phil Gramm is the second-largest recipient in the Senate of financial contributions
from Enron, receiving $97,350 from the company between 1989 and 2001, according to
data provided by The Center for Responsive Politics. The senator receiving the largest
contribution from Enron is Sen. Kay Bailey Hutchinson, R-Texas, who received $99,500.
The subpoenas came as government and congressional scrutiny of the collapse intensified.
Over Thursday and Friday, it was disclosed that Enron's chairman, Kenneth Lay, contacted
top Bush administration officials and Arthur Greenspan, chairman of the Federal Reserve,
in October about Enron's financial difficulties.
Secretary of Commerce Don Evans said Lay sought assistance from the federal government,
but Lay said in a statement late Thursday that he only sought to alert top financial
leaders that his mammoth firm was having difficulties.
President Bush, who has received political and financial support from Enron and Ken
Lay in all his political races, said Lay did not contact him.
No one has accused Bush officials of wrongdoing.
When Enron received no outside financial assistance, it reported to stockholders that
it had $500 million of previously unreported debt. This resulted in a sell-off of
Enron stock. The company sought protection under Chapter 11 of the U.S. Bankruptcy
Code on Dec. 2.
The collapse of its stock resulted in drastic losses to the retirement and savings
programs of the energy company's 21,000 employees and major layoffs.
Arthur Andersen, the company's auditing firm, reported in testimony in December that
it told Enron officials that some of their financial transactions might be illegal.
Joseph Berardino, Andersen chairman, also testified that Enron withheld financial
information from Andersen. He admitted that his firm's accountants may also have made
some mistakes.
Thursday, Andersen disclosed that a "significant" number of correspondence, electronic
files and other data may have been destroyed.
On Sept. 5 Gramm announced that he would not seek re-election after serving 18 years
in the Senate. During his retirement announcement, Gramm said that he had achieved
his goals as a senator and would move on to another career.
Gramm's spokesman, Larry Neal, declined comment on the subpoenas, but said Enron
had nothing to do with Gramm's decision not to seek another term.
"He outlined in detail in his retirement announcement his reasons for leaving, and
those were his only reasons," Neal said.
The House Energy and Commerce Committee, run by Republican Rep. Billy Tauzin, R-La.,
also wants to talk to Wendy Gramm. Tauzin requested the interview with Wendy Gramm
by name in a Dec. 10 letter to Enron.
Many Washington pundits speculate that Phil Gramm, a former economics professor and
ranking member of the Senate Banking Committee, is a likely future choice for a high-level
Cabinet position or other slot in the government where he could use his financial
expertise.
A prolific fundraiser, Phil Gramm was chairman of the National Republican Senatorial
Committee during the 1994 and 1996 election cycles and raised $158.5 million, according
to his office.
The spectacular financial collapse of Houston-based Enron has drawn broad scrutiny
from a host of federal agencies and congressional committees.
On Wednesday, it was revealed that the Justice Department had opened a criminal investigation
into the Enron matter.
On Thursday both U.S. Attorney General John Ashcroft in Washington and U.S. Attorney
Michael T. Shelby in Houston stepped aside from the investigation. Selby's office
announced that he and several other attorneys had relatives who were employed by Enron.
Ashcroft received a $25,000 contribution from Enron during his run for re-election
to the Senate from Missouri and an unsuccessful attempt to win the Republican presidential
nomination.
The Securities and Exchange Commission also has opened a probe into whether Enron
officers were able to capitalize on knowledge of the firm's financial condition by
selling millions of dollars in stock prior to the stock price fall. The agency also
wants to determine whether Enron financial claims to investors were misleading and
whether Arthur Andersen's audit of those statements was proper.
The House Energy and Commerce Committee led by Tauzin and Ranking Minority Member
John Dingell, D-Mich., on Friday announced that it was demanding a host of financial
records -- including some that Arthur Anderson says were destroyed -- as well as interviews
with Enron's financial oversight officials.
The request covers 43 areas of Enron's finances and corporate behavior including
all earnings-related documents and memos, details about the finances and discussions
related to several outside investment vehicles operated outside the company's normal
procedures.
In the Senate, a Commerce Committee subcommittee -- led by North Dakota Democrat
Byron Dorgan -- already has held a hearing on the loss of pension funds when the stock
price collapsed. At that hearing, a top Arthur Andersen official said he thought there
was a possibility that criminal acts had been committed by the company.
Dorgan plans more hearings into the loss of the retirement funds but so far has been
unsuccessful in getting Lay to appear before the committee.
The Senate Government Affairs Committee also announced an investigation on Jan.
2 into the collapse, choosing to focus on whether government agencies failed to detect,
or ignored, signs of the impending collapse. The committee plans a hearing on Jan.
24, according to Chairman Joe Lieberman, D-Conn.
The House Government Reform Committee has been slower to formally step into the fray,
but its ranking member, California Democrat Henry Waxman, has been vocal about the
possibility that Enron used undue influence on administration officials to avoid additional
scrutiny of its finances and practices before the collapse. Waxman also has been engaged
in a fight with the Bush administration over releasing details of meetings between
Enron officials and high-ranking Bush administration officials, when the White House
was preparing a national energy policy.
On Jan. 3 the vice president's office provided Waxman with a list of contacts between
the vice president or his staff and Enron officials. The letter, from David S. Addington,
the vice president's counsel, said that neither the vice president nor his staff had
ever discussed Enron's financial status with the company's representatives.
(Mark Benjamin is UPI's chief congressional correspondent, and Nicholas M. Horrock
is UPI's chief White House correspondent.)
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