Firm Accused of Withholding Data
Already under fire for shredding documents, Enron Corp. is now facing accusations that it failed to turn over records to congressional investigators looking into the company’s collapse.
Sen. Byron L. Dorgan (D-N.D.), who chairs a subcommittee that will hear from former Enron Chairman Kenneth L. Lay next week, is not satisfied that Enron released all the records that investigators are seeking, a source close to the probe said Wednesday.
The records relate to the controversial off-the-books partnerships that masked the company’s financial problems. Among other things, the Senate Commerce Committee’s subcommittee on consumer affairs is seeking a list of investors in those partnerships.
The partnerships are a key focus of investigators piecing together the causes of Enron’s Chapter 11 bankruptcy filing on Dec. 2, less than a month after it announced previously unreported losses of $586 million over nearly five years.
Dorgan was unavailable for comment Wednesday, and an Enron attorney did not return a call for comment.
Senate investigators are pushing Enron to turn over the partnership documents before Monday’s hearing with Lay, who is appearing voluntarily and without a grant of immunity.
Lay is likely to be grilled about why Enron failed so abruptly, costing investors and employees billions of dollars in stock and retirement fund losses. He resigned as chairman and chief executive Jan. 23.
At least one congressional committee appears satisfied that Enron has provided all requested documents.
Rep. James C. Greenwood (R-Pa.), who chairs a House Energy and Commerce subcommittee, said his investigators have not been stymied by Enron’s resistance to turning over documents.
But Greenwood lambasted Enron’s continued shredding of internal documents until earlier this month, even after the company was aware of numerous government investigations.
“What they have shredded is their credibility,” Greenwood said. “It’s outrageous that while Enron was the subject of investigations by the Justice Department, the SEC and multiple committees of Congress, it would get anywhere near a shredder. They shouldn’t shred so much as an old newspaper without carefully clearing it with investigators.”
In Houston, an Enron spokeswoman declined to say whether the firm had ceased all document destruction.
“We have and will continue to comply with requests for information,” said spokeswoman Karen Denne. “We asked the Department of Justice to come in and investigate, and the FBI is currently conducting an investigation.”
Stephen Cooper, the bankruptcy consultant selected this week as Enron’s interim chief executive, said a special committee of the energy giant’s board should complete an internal investigation in less than a week.
Cooper participated in a conference call with reporters Wednesday along with former Chief Financial Officer Jeff McMahon, who was promoted this week to president. McMahon was one of several executives who complained about the firm’s off-the-books partnerships, according to a memo written by Enron Vice President Sherron S. Watkins.
McMahon declined to answer questions about his complaints, and Cooper said he was not focused on the causes of Enron’s fall.
“I’m not gonna spend my time here looking in the rearview mirror,” he said. “The fact of the matter is, there are a lot of people here who deserve our best shot at reorganizing this company, and the only way that’s going to happen is if we look forward,” he said.
Some analysts say the remains of Enron are likely to be sold off in pieces in order to pay creditors. Cooper said that although Enron has sold its biggest revenue-generating divisions, the small pipelines and other remaining assets are “very manageable, very steady businesses” that may propel the firm enough so it can emerge from bankruptcy.
aid the firm had about $10 billion in secured debt (debt guaranteed by the pledge of assets) and $30 billion in unsecured debt.
Also Wednesday, congressional investigators indicated they would ask Enron officials for more information about a warning made in August to Lay and the company’s board of directors about Enron’s accounting irregularities.
Margaret Ceconi, a former sales director at Enron Energy Services, alleged in an Aug. 29 e-mail that her division had hidden losses of more than $500 million. House Energy and Commerce Committee leaders wrote to Lay, asking, “What happened to Ms. Ceconi’s e-mail after you received it and how has Enron responded to it?”
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Times staff writer Jeff Leeds, in Houston, contributed to this report.
