Enron’s Ex-Chief Won’t Testify

Former Enron Chairman Kenneth L. Lay on Sunday abruptly canceled his much-anticipated appearance before Congress, contending he would not receive a fair hearing.

Lay changed his mind about testifying before the Senate Commerce Committee today, after comments by congressional leaders on Sunday television news shows suggested that “judgments have been reached and the tenor of the hearing will be prosecutorial,” said his attorney, Earl J. Silbert.

Lay had agreed to appear voluntarily at the hearing, though other committees have issued subpoenas in the Enron investigation. Committee sources said no decision had been reached as of Sunday night on whether the members will subpoena Lay to appear in the future.

His client “cannot be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard,” Silbert said in a letter to Sen. Ernest F. Hollings (D-S.C.), the committee chairman, and Rep. Michael G. Oxley (R-Ohio).

Until Jan. 23, Lay was chairman and chief executive of Enron Corp., once the country’s seventh-largest corporation. The energy company filed for Chapter 11 bankruptcy protection Dec. 2 after questions about its financial health and questionable accounting practices sent its stock plummeting.

The Senate Commerce Committee hearing--at which Lay was to be the only witness--was canceled. The House Financial Services subcommittee on capital markets will hear this afternoon from Securities and Exchange Commission Chairman Harvey L. Pitt and from William Powers, the University of Texas law professor who led an internal inquiry into the company’s collapse. The report of that inquiry--a scathing rebuke to the company, its directors and its accounting firm, Andersen--was released late Saturday.

Lay also had been scheduled to appear Tuesday before the House Financial Services subcommittee, along with Andersen Chairman and CEO Joseph F. Berardino, but will not attend that hearing either.

Meanwhile on Sunday, Berardino, whose firm also faces several federal and congressional probes, said Andersen hired former Federal Reserve Chairman Paul A. Volcker to head a panel to help overhaul the way the firm operates. “It’s obvious the public has been let down more than once,” Berardino said. “We will be very tough on ourselves.”

Lay’s decision evoked a harsh reaction from congressional leaders.

“I am disappointed,” said Sen. Byron Dorgan (D-N.D.), chairman of the Senate Commerce subcommittee on consumer affairs, the panel before which Lay was scheduled to testify. “I believe the American people, the Congress and his own employees have a right to hear a public explanation of what happened at the Enron Corp.”

“I doubt they ever thought appearing before a congressional committee would be a walk in the park,” Dorgan added, “because there are tough and difficult questions that need answers. . . . Eventually, Mr. Lay and others will have to provide those answers, and sooner rather than later.”

Lay, who reportedly accepted the committee’s invitation to appear against his attorney’s advice and without any offer of immunity, was in Washington on Sunday preparing for his appearance. But while listening to lawmakers on the talk shows, he heard “inflammatory statements” suggesting that “judgments have been reached and the tenor of the hearing will be prosecutorial,” Silbert said.

The lawyer cited a comment by Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House Energy and Commerce Committee, predicting that some senior company executives will end up “in the pokey.”

Silbert also cited a remark by Dorgan on NBC’s “Meet the Press” that the largest bankruptcy filing in corporate history put some people in “real jeopardy.”

Rep. Henry A. Waxman (D-Los Angeles), a senior Democrat on the House Energy and Commerce Committee--one of a dozen congressional committees investigating the Enron collapse--said, “It’s a real setback for those of us who want some accountability from this man.”

Waxman said Congress should subpoena Lay because he will not testify voluntarily.

“It looks like statements that he made that he was willing to be cooperative were not sincere,” Waxman added.

Sen. Peter Fitzgerald (R-Ill.), top Republican on the Senate Commerce subcommittee on consumer affairs, said: “In my judgment, Mr. Lay is again taking a dive.”

“It’s that lack of accountability and responsibility that led to the Enron debacle in the first place. He will eventually have to answer questions--perhaps not before the Commerce Committee but possibly in a forum where his testimony can be compelled.”

Lay’s appearance was to kick off a week of hearings on Capitol Hill probing Enron’s collapse and featuring a notable list of witnesses. Andrew S. Fastow, the company’s former chief financial officer, is scheduled to appear before the House Energy and Commerce subcommittee Thursday but is expected to invoke the 5th Amendment.

Former Enron CEO Jeffrey K. Skilling, who left the company in August, also is scheduled to appear before the panel.

Fitzgerald noted that the Powers report was critical of many parties, including Lay.

Congress will use the information it unearths to determine what laws may have been broken and whether any laws or regulations should be changed to prevent such corporate misdeeds. The information also may be used by the Justice Department as it investigates possible criminal wrongdoing by the company, whose downfall left more than 6,000 people without jobs and shattered the savings of thousands of employees and investors.

Enron attorney Robert S. Bennett said Sunday: “The company is fully cooperating with Congress, and we are encouraging people who are requested to testify to testify. But I have read Mr. Silbert’s, letter and I understand his concerns and the sound basis for them.”

Earlier Sunday, Waxman said in an interview that Lay should reveal the identities of investors in more than 3,000 controversial off-the-books partnerships that led to the company’s collapse. The names were left out of the Powers report.

“These entities became the basis for looting the corporation,” Waxman said. “If we want to know where the money went, we need to know who these partners were.”

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(BEGIN TEXT OF INFOBOX)

Under Scrutiny

This week, a number of congressional committees and subcommittees will hold hearings on the collapse of Enron Corp., the role of its auditor, Andersen, and related regulatory issues. Here is a partial schedule:

Monday Senate Commerce Committee. Chairman: Sen. Ernest F. Hollings (D-S.C.). Witness: Former Enron Chairman and Chief Executive Kenneth L. Lay was scheduled but canceled. Broad focus on events leading to collapse of Enron.

House Financial Services Committee subcommittee on capital markets. Chairman: Richard H. Baker (R-La.). Witnesses: SEC Chairman Harvey L. Pitt and an Enron director, William Powers, chairman of Enroneithers special investigative committee. Focus on the causes of Enroneithers collapse.

Tuesday

Senate Governmental Affairs Committee. Chairman: Joseph I. Lieberman (D-Conn.). Witnesses: to be announced. Focus on company employees who had substantial amounts of Enron stock in their 401(k) retirement accounts.

Continuation of House Financial Services Committee hearing. Witnesses: Andersen CEO Joseph F. Berardino.

House Energy and Commerce subcommittee on oversight and investigations. Chairman: James C. Greenwood (R-Pa.). Witness: William Powers. Focus on the findings of Enroneithers special investigative committee concerning certain transactions between the company and current and former employees.

Wednesday

House Committee on Education and the Workforce. Chairman: John A. Boehner (R-Ohio). Witness: Labor Secretary Elaine Chao. Focus on 401(k) reforms.

House Energy and Commerce Committee. Chairman: Rep. W.J. furtherBillyfrom Tauzin (R-La). Witnesses: professors of accounting. Focus on lessons learned from Enron’s collapse.

Thursday

Senate Health, Education, Labor and Pensions Committee. Chairman: Sen. Edward M. Kennedy (D-Mass). Witness: former Enron workers, Enron savings plan administrator and retirement plan experts.

House Energy and Commerce subcommittee on oversight and investigations. Chairman: James C. Greenwood (R-Pa.). Witnesses: former Enron CEO Jeffrey K. Skilling, former Chief Financial Officer Andrew S. Fastow*, and Enron Chief Accounting Officer Richard Causey.

*Fastow is expected to exercise his 5th Amendment right against self-incrimination.

House Committee on Education and the Workforce. Chairman: John A. Boehner (R-Ohio). Witnesses: Enron human resources and benefits executives, pension consultants, former Enron employee.

Source: Times News Services

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