Enron
chief will be forced to testify
By:
Julian Borger
The Guardian, February 5, 2002
The Enron
scandal exploded into open political warfare yesterday, as Congress declared
its intention to subpoena the bankrupt energy trader's former chief
executive, Kenneth Lay, and the Democrats accused the Bush administration of
running a "cash-and-carry" government on behalf of the disgraced
company.
Mr. Lay failed
to turn up to the first day of congressional hearings into Enron's collapse,
amid signs that what was initially interpreted as a corporate disaster could
also emerge as a huge criminal fraud.
After
congressmen appeared on television at the weekend accusing Enron executives
of "corporate corruption", and suggesting someone may end up going
to jail for insider trading, Mr. Lay withdrew his offer to testify.
"These
inflammatory statements show that judgments have been reached and the tenor
of the hearing will be prosecutorial," his lawyer, Earl Silbert, wrote
to the Senate commerce committee and the House financial services committee.
Democrats and
Republicans lined up to support the issue of subpoenas to force Mr. Lay to
come before their committees.
Last night Mr.
Lay said he was stepping down from Enron's board. Mr. Lay had already
resigned as chief executive officer, but had retained his seat on the board,
giving rise to criticism that he was trying to control the investigation
into Enron's affairs.
Senator Ernest
Hollings, the Democratic chairman of the Senate commerce committee, told a
press conference that a vote would be held today on issuing a subpoena that
would force Mr. Lay to appear a week later, on February 12.
His Republican
counterparts on the committee said they would support the subpoena, but were
horrified when Mr. Hollings transformed the press conference into the most
vituperative attack to date on President George Bush's role in the Enron
scandal. He accused Mr. Bush and his administration of being in Enron's
pocket, and creating a "culture of government corruption".
"I've
never seen a better example of cash- and-carry government than this Bush
administration and Enron," he said. "Specifically, everyone knows
how the Bushes got the cash," he added, referring to Enron as "the
largest contributor to the Republican committee running the convention and
the inaugural committee and everything else like that".
He recited a
list of cabinet members and other administration officials who he claimed
had formerly been on the Enron payroll, as employees, advisers or lawyers.
The list
included the attorney general, John Ashcroft, whom the senator described as
"Enron's man"; the president's economic adviser, Lawrence Lindsey;
the army secretary, Thomas White; and the energy secretary, Spencer Abraham.
He accused them all of pursuing policies that were favourable to Enron.
The justice
department issued a statement rejecting the Democrats' demands for the
appointment of a special counsel to look into the Enron scandal. It insisted
there was no conflict of interests involved in the inquiry it was
conducting.
Mr. Ashcroft
had earlier excused himself from the investigation as he received financial
backing from Enron for his senatorial campaign in the 2000 elections.
Mr. Hollings's
attack drew rebukes from congressional Republicans. The party's leader in
the Senate, Trent Lott, said the Democrats were "exploiting the
financial tragedy of thousands of Enron employees and those who had Enron
stock for their own political purposes".
Andrew Fastow,
the former chief financial officer, and Michael Kopper, another former Enron
executive, are expected to appear before a house committee on Thursday but
are likely to invoke their fifth amendment right not to testify to avoid
self-incrimination. Even if Mr. Lay is forced to appear, he may invoke the
same right.
An internal
report commissioned by the Enron board and published on Saturday found
executives had creamed millions from the firm through shell companies,
breaking ethical and accounting rules.
The report,
conducted by a Texas law professor, William Powers, also found that Enron
executives had sold off millions in company shares while employees were
forced to hold on to Enron stock in their pension funds.
Responding to
the report, the Republican head of the house energy committee, Billy Tauzin,
said "somebody ought to go to the pokey for this".
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