Senate Will Investigate Enron Debacle

Two key Senate Democrats on Wednesday announced new investigations into Enron Corp.’s financial meltdown, with one of the probes possibly touching on the company’s dealings with the Bush administration.

Sen. Joseph I. Lieberman (D-Conn.), chairman of the Governmental Affairs Committee, plans to start hearings Jan. 24. And Sen. Carl Levin (D-Mich.), chairman of the Permanent Subcommittee on Investigations, intends to subpoena company documents for an examination into the conduct of Enron officers and the company’s auditor.

“Something was very rotten in the state of Enron,” Levin said.

At least five other congressional investigations are planned or underway in addition to probes by the Justice and Labor departments and the Securities and Exchange Commission. But Lieberman’s hearings could prove politically riveting because he is regarded as a potential presidential candidate in 2004.

Lieberman said his committee’s inquiry would focus on whether government agencies could have done more to protect thousands of Enron employees and investors hurt by the largest bankruptcy in U.S. history.

“Where was the SEC?” he asked. “Where was the Federal Energy Regulatory Commission?”

Lieberman also said the hearings could explore Enron’s ties to the Bush administration.

Enron Chairman and Chief Executive Kenneth Lay was a major donor and fund-raiser for Bush in the 2000 campaign.

“This is going to be a search for the truth, not a witch hunt,” Lieberman said. “We’re going to go wherever that search takes us, and we’re not ruling anything out. It’s a matter of public record that executives of Enron had close relationships with people who are now in the Bush administration.”

Congressional Democrats have pushed for the White House to release details of private meetings last year between Enron executives and administration officials on energy policy.

“It seems to me that now, after the collapse of Enron, we have even more reason to want to know what Mr. Lay was saying to the administration,” Lieberman said. “What advice was Enron giving the administration, and was it in any way self-serving?”

Last week, Bush said that he had no recent contact with Enron executives and that he would let the probes lead where they may.

Lieberman also noted that Enron officials had close relationships with some Democrats, and he said those links could be examined.

Levin said his inquiry would look into “what appears to be a massive shell game [by Enron officials] with multiple layers of conflicts of interest.”

These conflicts, he said, included the use of offshore business entities and limited partnerships that masked the firm’s true finances.

Houston-based Enron filed for Chapter 11 bankruptcy protection a month ago after disclosing it had overstated its earnings by $586 million during the last four years. Its stock has tumbled from more than $90 a share a year ago to less than a dollar. Its shares closed Thursday at 63 cents, up 3 cents on the New York Stock Exchange.

Levin said his panel will try to find out “what did Enron’s top officers and board members know [about the company’s financial condition], when did they know it and what did they do about it.”

The probe also will look at why Enron’s accountant, Arthur Andersen, did not catch the financial problems beforehand.

“Our job is to find out where current laws failed,” Levin said.

Some congressional Republicans also are eager to find out what happened to Enron. In the GOP-controlled House, aides to Rep. W.J. “Billy” Tauzin (R-La.), chairman of the Energy and Commerce Committee, are preparing to sift through 2 million documents sought from the company.

Sen. Susan Collins (R-Maine), top Republican on the subcommittee headed by Levin, expressed support for the investigation he has launched, saying she was concerned by reports that top Enron executives sold company stock at a high profit while lower-level employees were forbidden from selling shares of the stock in their retirement accounts.