In opening today’s all-day hearing into Enron’s financial collapse, subcommittee chairman Rep. James Greenwood (R-Pa.) said “a number of witnesses today were members of the corporate leadership team at Enron who must bear the greatest weight for its collapse.
“Sadly, it is increasingly clear that this collapse was not brought about by the isolated acts of rogue employees,” Greenwood said. “A disaster of this magnitude requires the complicity of far more than a few bad apples.”
The key witness in Thursday’s marathon hearing was former Enron CEO Jeffrey Skilling.
Skilling told the subcommittee he was “devastated and apologetic about what Enron has come to represent.”
He testified that he had no knowledge of Enron’s improper business partnerships or unlawful accounting activities and at the time he left the energy giant last August he felt the company was on sound financial ground.
“While I was at Enron, I was not aware of any financing arrangements designed to conceal liabilities or inflate profitability,” the former CEO told the House panel in his opening statement.
Skilling also testified that he was unaware of any conflict of interest that arose from several Enron employees who managed these questionable partnerships.
Other key witnesses
Several executives declined to provide testimony to the House subcommittee, including former chief financial officer Andrew S. Fastow.
Fastow invoked his fifth amendment right to remain silent.
“On the advice of my counsel, I respectfully decline to answer the questions,” Fastow told the representatives.
Three other key witnesses who were called to testify about Enron’s financial activities — Michael Kopper, a former managing director of Enron Global Finance; Richard Buy, Enron’s current chief risk officer; and Richard Causey, the current chief accounting officer — also sought protection from self-incrimination under the fifth amendment.
The House had issued a subpoena order for both Fastow and Kopper. Causey and Buy appeared voluntarily, accompanied by legal counsel.
Several members of the House panel said they believed after reading the Powers Report that Andrew Fastow and Michael Kopper were the main engineers of Enron’s allegedly false partnerships.
The Powers Report, released last Saturday, divulged extensive information about potentially unlawful business transactions, that led to the company’s bankruptcy.
Examples detailed in the report include one transaction in which Andrew Fastow turned a $2,500 investment into $4.5 million within two months.
Another deal outlined in the report accused Michael Kopper of turning an initial $125,000 investment into $10.5 million through another partnership investment.
The panel also questioned Jeffrey McMahon, the company’s current president and chief operating officer; Jordan Mintz, former general counsel; Thomas Bauer, a partner of Arthur Andersen; and John Olson, an independent securities analyst from Houston, for nearly three hours.
The House subcommittee is one of twelve congressional investigations into Enron, which filed the nation’s largest corporate bankruptcy on Dec. 2, 2001.