Senate Moves to Cite Enron for Contempt
The state Senate revived its effort to hold Enron Corp. in contempt after nobody from the company showed up Wednesday to answer lawmakers’ questions about missing documents.
If adopted by the full Senate in coming weeks, contempt penalties against Enron could include $1 million a day fines, legislation that bans the company from doing business in the state, the jailing of executives or a resolution urging California’s public employee retirement systems to divest themselves of Enron stock.
The Legislature weighed some of those measures in September after Enron failed to comply with a Senate subpoena for documents. But on the last day of the legislative session, Enron attorneys promised to deliver the documents, and lawmakers never voted on the contempt resolution.
“In retrospect, we should have passed it,” said Sen. Debra Bowen (D-Marina del Rey).
The Houston-based energy giant filed for bankruptcy in December after the value of its shares fell to less than $1 from $85 the previous year. The collapse cost the California Public Employees’ Retirement System $40 million in a portfolio valued at $147 billion. The California State Teachers Retirement System lost $47.5 million on a portfolio valued at $108 billion.
For nearly a year, Enron has been resisting the demands of the Select Committee to Investigate Price Manipulation of the Wholesale Energy Market, chaired by Sen. Joe Dunn (D-Santa Ana).
The committee’s mission is to figure out why the wholesale electricity market California launched in 1998 spiraled out of control two years later.
In an investigative mode unusual for the Legislature, Dunn’s committee has demanded copies of extensive records from several major energy companies.
Enron has submitted 130,000 pages so far, Dunn said, but “only a handful” are relevant to the subpoena.
Several weeks ago, Dunn’s committee submitted a second subpoena to Enron seeking information about documents allegedly destroyed by Enron’s accounting firm. Enron officials referred Dunn to that firm, Andersen, and to federal investigators.
Dunn asked Enron officials to appear before the panel on Wednesday to answer questions about their failure to comply with the subpoena, but nobody showed.
Dunn’s committee is expected to recommend on Tuesday that the full Senate find Enron in contempt.
There is little precedent to guide lawmakers seeking to punish Enron. Experts say the last time the Legislature held a company in legal contempt was in 1929, when several executives of a cement company were ordered to jail because they refused to cooperate in a price-fixing investigation.
The state Supreme Court voided the contempt citations in that case on grounds that the Senate’s demands for information were too vague.
