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A background report from Spencer Michael on the latest in the Enron investigation.
The collapse of Enron, the huge energy and trading company, continued to reverberate in the capital. Justice Department officials said they were forming a task force to conduct a criminal investigation of Enron, the nation's largest marketer of electricity and natural gas. The probe is expected to focus on potential accounting fraud. Once ranked as the seventh- largest corporation in America, with 21,000 employees, the company is now in shambles. Enron's problems became public this fall, when the company revealed it had kept hundreds of millions of dollars of losses off the books. In the third quarter of last year alone, Enron had a $600-million loss. It filed for bankruptcy on December 2, the nation's largest corporate bankruptcy. Employees have lost much of their retirement money because their pension accounts were built around Enron stock; stock that once sold for $85 a share now is selling for less than a dollar. In the wake of those losses, President Bush said today his administration will "fully investigate issues such as the Enron bankruptcy" with an eye toward changing pension rules.
PRESIDENT GEORGE W. BUSH:
One of the things we're deeply concerned about is that there have been a wave of bankruptcies that have caused many workers to lose their pensions. And that's deeply troubling to me. And so I've asked the Secretary of Treasury, Secretary of Labor, Secretary of Commerce to convene a working group to analyze pensions rules and regulations, to look into the effects of the current law on hard working Americans and to come up with recommendations as to how to reform the system to make sure that people are not exposed to losing their life savings as a result of a bankruptcy, for example.
There are also questions about the administration's ties to Enron. The company's chief executive officer, Kenneth Lay, was a large contributor to President Bush's campaign. The President said today he never discussed Enron's problems with Lay, who took part in a White House economic summit last spring. Reportedly, lay also donated to a committee headed by then Senator John Ashcroft, and today, Ashcroft, now the Attorney General, removed himself from participation in the investigation. Yesterday, the Vice President Dick Cheney's office confirmed that Mr. Cheney met with Enron officials at least four times last year, although, aides said, Enron's financial position was not discussed. And today, the White House confirmed that Lay called Treasury Secretary Paul O'Neill and Commerce Secretary Donald Evans after the public disclosures of the company's finances. Spokesman Ari Fleischer was asked if the contacts were appropriate.
The government acted as the government should. It took a look at this from a substantive matter, from when Mr. Lay made those phone calls, and decided the appropriate step was not to intervene or take any action. I think if anything else were done, you'd be making just the opposite charge, that he took action because of his prior relationship with Mr. Lay. And that is not the case here; that did not happen. This was done based on judgment of the cabinet secretaries and the merits, and they decided properly and wisely so.
Late today, Enron's auditor, the accounting firm Aurthur Anderson, said a significant number of company- related documents had been destroyed. Meanwhile, other investigations are under way. The Securities and Exchange Commission is in the midst of a ten-week-old inquiry into Enron and its auditor. And on Capitol Hill, there are now five congressional panels looking into the company's collapse.
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