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http://www.usatoday.com/news/washdc/jan02/2002-01-02-enron.htm
Senate committee to investigate Enron collapse
WASHINGTON (AP) — A Senate committee will subpoena documents from Enron's board of directors, auditors and key managers as part of an investigation into the energy company's sudden collapse and lack of government protection for investors.
Sen. Joseph Lieberman, D-Conn., announcing the investigation, promised Wednesday "a search for the truth, not a witch hunt." He did not rule out an examination of Enron's relationships with the Bush administration.
"We're going to go wherever the search takes us," said Lieberman at a news conference, noting Enron Chairman Kenneth Lay's involvement in crafting the administration's energy agenda last spring. "We've got to ask whether the advice rendered (by Lay) was at all self serving."
Lieberman's Governmental Affairs Committee plans to hold its first hearing on Jan. 24, a day after Congress returns from its holiday recess. Its initial focus will be on why federal regulators, including the Securities and Exchange Commission and the Federal Energy Regulatory Commission, did not raise warning flags about the Enron Corp.
"The untimely and wholly unexpected failure of a corporate giant like Enron is an alarm call to all of us in government," said Lieberman. He said it has sent shockwaves into the investment community and concern about energy industry deregulation.
The panel's investigations subcommittee, headed by Sen. Carl Levin, D-Mich., planned to pursue a separate track as it tries to determine how much Enron's board of directors and auditors knew of Enron's sometimes secretive business dealings, including the use of questionable partnerships and "offshore entities" that disguised the extent of the company's debts.
The Wall Street Journal reported Wednesday that internal Enron documents show that top company officials were involved in the creation and oversight of the partnerships, and that they viewed them as crucial to company growth.
The procedures set up by Enron required former chief executive and president Jeff Skilling and two other senior Enron officials to approve all transactions with the partnerships, the newspaper said.
The partnerships allowed Enron to keep some $500 million in debts off its books, inflating its profits.
Levin said he was dismayed about "what appears to be a massive shell game with multiple layers of conflict of interest" that contributed to Enron's collapse at a time when most investors believed the company to be thriving.
Top Enron executives and directors "apparently reaped almost $1 billion in stock sales in 2000 and 2001," said Levin, while hundreds of Enron workers were barred from selling Enron stock in their 401k retirement fund during the company's collapse.
Maine Sen. Susan Collins, the subcommittee's ranking Republican, said in a statement that she wants to know whether Enron executives and board members, when selling their stock, "knew of the company's impending financial situation."
Valued at $90 a share a year ago, Enron stock fell to less than $1 a share in early December as the company — once the seventh largest in the country in terms of revenue — filed for bankruptcy protection.
Levin said his subcommittee wants to find out why Enron's use of special partnerships and "offshore entities" to mask some of its debt did not raise red flags with the board of directors and the company's auditor, Arthur Andersen LLP.
Last month, during a House hearing, Arthur Andersen defended its work for Enron, but its chief executive conceded shortcomings in the accounting profession. "Our system of regulation and discipline will have to be improved," said Anderson chief Joseph Berardino.
Andersen said Wednesday that a review by another Big Five accounting firm, Deloitte & Touche, had found that Andersen's auditing work provided "reasonable assurance of compliance with professional standards."
The Senate Governmental Affairs Committee is among a half dozen committees and subcommittees expected to hold hearings in both the House and Senate in the coming months on Enron's collapse, one of the largest ever. The Securities and Exchange Commission and the Labor Department also have investigations underway.
During the holidays, President Bush, asked about Enron, expressed concern over the losses suffered by Enron workers and investors and said the government ought to investigate why workers were kept from selling Enron stock as its value plummeted.
Bush said he had not spoken to Kenneth Lay, a longtime friend and a major contributor to his presidential campaign, since the Dec. 2 bankruptcy
Senate committee to investigate Enron collapse
WASHINGTON (AP) — A Senate committee will subpoena documents from Enron's board of directors, auditors and key managers as part of an investigation into the energy company's sudden collapse and lack of government protection for investors.
Sen. Joseph Lieberman, D-Conn., announcing the investigation, promised Wednesday "a search for the truth, not a witch hunt." He did not rule out an examination of Enron's relationships with the Bush administration.
"We're going to go wherever the search takes us," said Lieberman at a news conference, noting Enron Chairman Kenneth Lay's involvement in crafting the administration's energy agenda last spring. "We've got to ask whether the advice rendered (by Lay) was at all self serving."
Lieberman's Governmental Affairs Committee plans to hold its first hearing on Jan. 24, a day after Congress returns from its holiday recess. Its initial focus will be on why federal regulators, including the Securities and Exchange Commission and the Federal Energy Regulatory Commission, did not raise warning flags about the Enron Corp.
"The untimely and wholly unexpected failure of a corporate giant like Enron is an alarm call to all of us in government," said Lieberman. He said it has sent shockwaves into the investment community and concern about energy industry deregulation.
The panel's investigations subcommittee, headed by Sen. Carl Levin, D-Mich., planned to pursue a separate track as it tries to determine how much Enron's board of directors and auditors knew of Enron's sometimes secretive business dealings, including the use of questionable partnerships and "offshore entities" that disguised the extent of the company's debts.
The Wall Street Journal reported Wednesday that internal Enron documents show that top company officials were involved in the creation and oversight of the partnerships, and that they viewed them as crucial to company growth.
The procedures set up by Enron required former chief executive and president Jeff Skilling and two other senior Enron officials to approve all transactions with the partnerships, the newspaper said.
The partnerships allowed Enron to keep some $500 million in debts off its books, inflating its profits.
Levin said he was dismayed about "what appears to be a massive shell game with multiple layers of conflict of interest" that contributed to Enron's collapse at a time when most investors believed the company to be thriving.
Top Enron executives and directors "apparently reaped almost $1 billion in stock sales in 2000 and 2001," said Levin, while hundreds of Enron workers were barred from selling Enron stock in their 401k retirement fund during the company's collapse.
Maine Sen. Susan Collins, the subcommittee's ranking Republican, said in a statement that she wants to know whether Enron executives and board members, when selling their stock, "knew of the company's impending financial situation."
Valued at $90 a share a year ago, Enron stock fell to less than $1 a share in early December as the company — once the seventh largest in the country in terms of revenue — filed for bankruptcy protection.
Levin said his subcommittee wants to find out why Enron's use of special partnerships and "offshore entities" to mask some of its debt did not raise red flags with the board of directors and the company's auditor, Arthur Andersen LLP.
Last month, during a House hearing, Arthur Andersen defended its work for Enron, but its chief executive conceded shortcomings in the accounting profession. "Our system of regulation and discipline will have to be improved," said Anderson chief Joseph Berardino.
Andersen said Wednesday that a review by another Big Five accounting firm, Deloitte & Touche, had found that Andersen's auditing work provided "reasonable assurance of compliance with professional standards."
The Senate Governmental Affairs Committee is among a half dozen committees and subcommittees expected to hold hearings in both the House and Senate in the coming months on Enron's collapse, one of the largest ever. The Securities and Exchange Commission and the Labor Department also have investigations underway.
During the holidays, President Bush, asked about Enron, expressed concern over the losses suffered by Enron workers and investors and said the government ought to investigate why workers were kept from selling Enron stock as its value plummeted.
Bush said he had not spoken to Kenneth Lay, a longtime friend and a major contributor to his presidential campaign, since the Dec. 2 bankruptcy
