Justice Dept. Announces Enron Investigation

Sources would not specify exactly when the criminal investigation began, but several sources said that the investigation would concentrate on whether Enron illegally defrauded lenders and shareholders by hiding some of its financial statements and investments.

The Justice Dept. said it would organize a special task force to conduct the Enron probe which will include federal prosecutors from New York, San Francisco, and Houston, the location of Enron’s headquarters, and prosecutors from the department’s fraud section.

Robert S. Bennett, a lawyer who represents Enron, said that he welcomed the department’s decision to launch a criminal investigation.

“We want to get to the bottom of this too,” he said. “A lot of decent and honorable people work at Enron and we should wait until the facts are out.” 

President Bush today ordered a separate review of the nation’s pension rules after Enron employees lost millions of dollars in savings.

The president said he launched the review to shed light on potential problems when companies collapse.

“One of the things that we’re deeply concerned about is that there has been a wave of bankruptcies that have caused many workers to lose their pensions,” he said.

Enron barred employees from selling their Enron shares in their 401(k) retirement accounts last month, causing thousands to lose their savings.

Mr. Bush has also been politically linked to the Texas-based company and its CEO Kenneth Lay by substantial campaign contributions.

The White House separately acknowledged that Enron representatives met six times with Vice President Dick Cheney or his aides on energy issues last year.

Enron declared bankruptcy on Dec. 2, after three months of failed merger talks with corporate rival Dynegy and several troubling financial disclosures.

Enron is already the subject of four congressional inquiries, and probes by the Securities and Exchange Commmission and the Labor Department.

Last month, Enron’s auditors testified before Congress that Enron may have committed “illegal acts” by hiding financial information of its subsidiaries and its outside partnerships.

Several civil suits have been filed by former employees, retirees, and investors. They accuse the company’s executives and board of profiting from a huge stock sell-off shortly before the shares crashed this December and hiding damaging financial information.

Earlier this fall, Enron had changed its pension program by granting additional stock to employees, but prevented them from selling until age 50. As Enron stock quickly plummeted to 73 cents from a $90 high, thousands of Enron employees lost much of their retirement. The civil suits filed by former employees and investors request that bank accounts of Enron executives and board members be frozen.

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