Text of Morning Session of Hearing on Enron
The New York Times
February 7, 2002
(Page 3 of 22)
And one analogy that I have
mentioned at at least one other
hearing that I will mention again today
-- I keep reminding myself of the
scene in "The Godfather" movie where
Tom Hogan, who is the attorney for
the godfather has a meeting with the
godfather, and the godfather tells him,
"Just remember, you can always steal
more with a briefcase than with a
gun." And I think what we have here is
a case where literally about $4 billion
was stolen from people. And it was stolen, unfortunately, from people, from real
people, thousands of whom are suffering. And, again, you know, I've read
biographies of half the people on the panel who are going to testify and not testify
today, and I am sure -- you know, you are going to have to live with yourselves,
regardless of the consequences of what happens with all these investigations.
But I will tell you on a personal basis as I look at this is that I hope you, in the dark
night of your own souls, think about some of the people who in fact throughout the
country, but particularly in the area of Texas, who literally lost their entire life
savings, and whose lives effectively in many ways is destroyed because of your
actions. Thank you, Mr. Chairman.
REP. GREENWOOD: The chair thanks the gentleman, and recognizes the chairman
of the full committee, the gentleman from Louisiana, Mr. Tauzin.
REP. BILLY TAUZIN (R-LA): Thank you, Chairman
Greenwood. And once again, let me express my gratitude
to you, Jim, and to you, Peter, for the extraordinary way in
which the subcommittee has conducted its business and
has gone about this investigation. And I would be remiss if
I did not once again thank my good friend, Mr. Dingell,
the ranking member of our committee, for the again
extraordinary cooperation we are getting on both sides of
the aisle in this investigation. Other committees may be
proceeding in a partisan, political manner, looking at this
manner. I hope Americans recognize the extraordinary
way the Democrat and Republican investigative team on
this committee and our members are working together to
try to get to the truth here. And I thank you again, Mr.
Dingell, for that cooperation and that effort.
REP. JOHN DINGELL (D-MI): Thank you, Mr. Chairman.
REP. TAUZIN: We're getting close to the bottom of this collapse and this mess, and I
believe the solid progress this week will help us tremendously as we determine not
only what happened but what we in turn can do to assure that something like this
doesn't happen again. We look forward this morning, of course, to the second
portion of our hearing into the fraudulent transactions that brought this
corporation down.
This past Tuesday, we heard a devastating report from the inside of the corporation,
from the chairman of Enron's on investigative committee. This report outlined the
extraordinary story of self- dealing, of deception, of bogus statements, of
irresponsible management, and indeed, I believe, of outright fraud. And I say
outlined because Dean Powers, in his report, did not have the ability, as the
committee does, to compel the production of documents or testimony, and it was
limited in scope. But it certainly reinforced the very troubling information we've
been unearthing in this investigation.
I think it's epitomized by one little line in the first memo that one of our witnesses,
Jordan Mintz, wrote on January 4th. And I quote, "Nicole has advised that if there
is a general theme or guideline to follow in the preparation process of all these
deals, it is to be as innocuous as possible in terms of descriptions, details, et
cetera."
Despite all the complicated dealings and cross-dealings and self-dealing we are
learning about, I still believe what we have before us is a simple story -- the simple
story of old fashioned theft and explicable acts -- inexplicable acts -- that allow the
perps to get away and to destroy the company. We know that the senior Enron
employees who controlled these transactions -- Chewco, LJM-I and LJM- II, the
Raptors and so many others -- participated in self-enrichment schemes at the
expense of the company, and the shareholders, and its own employees.
And yet these schemes could have been stopped with proper oversight by certain
senior executives, a few of whom are with us today. Absent their taken action,
matters could have been put right by Enron directors who were ultimately
responsible for the health of the company and the interests of the shareholders,
but that didn't happen.
They allowed the CFO to work both sides of the negotiating table. They enabled
him to participate in his own risky high-return transactions by effectively insulated
him from the risk, and this assured his ability to take away tens of millions of
dollars, and ensure that Enron would be on even more shaky ground as it ensured
more risk and even riskier proposals. They allowed sweetheart deals -- literally -- as
we've recently discovered, to take place among senior employees. And they allowed
a fraud to be perpetrated on the shareholders. And they told the shareholders that
the company was making money that it was actually losing, so the stock price
would remain high -- so senior officers could sell of their shares and make millions,
while the vast majority of the workers would be left holding empty pocketbooks.
Be sure the accountants and legal advisors assisted, wittingly or unwittingly, in the
sham transactions. And we will have the opportunity to see how we might resolve
some of those perverse incentives that allowed that to happen.
This morning, however, we have the opportunity to question several of the
principals that could have prevented this collapse. They have a lot to answer for. We
also have a couple of senior officers who attempted to alert those charged with
policing those deals to no avail. That's a good story. We'll hear from some good
officers in the company who smelled a cancer growing inside and tried to do
something about it. We'll be able to explore today why they failed.
For example, we'll have before us Jordan Mintz, the current general counsel for
Enron Global Development. He attempted to get then Enron president and CEO
Jeff Skilling to sign deal approval sheets as was required, but he couldn't get Mr.
Skilling to sign them. We're going to ask Mr. Skilling today about that, and we'll
find out why those sheets were not signed -- why they were signed by everybody
else but him. We'll have Enron board members, and we can ask them about the
oversight of these transactions. |
