Enron probe could reach Bush

January 3, 2002
Enron probe could reach Bush
Backed campaign: Senate committee to focus on directors' role, partnerships
Reuters, with files from The Associated Press
WASHINGTON - Fallen energy giant Enron Corp. faces further scrutiny on Capitol Hill with another committee announcing yesterday it would probe the company's collapse, possibly looking at connections between Enron and the White House.
The Senate Governmental Affairs Committee's permanent subcommittee on investigations will subpoena documents next week and hold a hearing on Jan. 24.
A Wall Street darling just a few months ago, Enron on Dec. 2 made the largest bankruptcy court filing in U.S. history after a rescue takeover by rival Dynegy Inc. fell apart amid investor concerns about Enron's murky finances.
Sen. Joseph Lieberman, who chairs the full government affairs committee, did not rule out looking into connections between Enron and the administration of George W. Bush.
Enron was a major backer of President Bush's election campaign. "There are some interconnections here with the Bush administration, but that is not the focus of this investigation," said Mr. Lieberman, a Democrat.
Sen. Carl Levin, the Michigan Democrat who chairs the subcommittee, said the investigation would focus on the role of Enron's directors in the collapse; accounting firm Andersen, which audited Enron's financial statements; and the company's use of complex financial partnerships.
Houston-based Enron is under investigation in Washington by at least five congressional committees, the market-regulating Securities and Exchange Commission and the departments of Justice and Labor.
Reports recently emerged that a week before filing for bankruptcy protection, Enron contributed US$100,000 to Democrats after giving nearly all its prior donations this year to Republicans.
The money went to the organization that aids Senate Democratic candidates, but a recently hired attorney for Enron insisted the donations were unrelated to congressional investigations.
Robert Bennett, a lawyer who represented former president Bill Clinton and other high-profile clients, said the money was pledged months before Enron's collapse prompted the congressional inquiries. Rather, he said, the shift reflected the Democrats taking control of the Senate this year.
"Donations of this type reflect certain political realities which are followed by all major corporations," Mr. Bennett said yesterday about Enron's US$50,000 cheques on Nov. 25 and Nov. 26 to the Democratic Senatorial Campaign Committee.
Once ranked No. 7 on the Fortune 500 list of top companies, Enron's stock closed at US63?, up US3? on the New York Stock Exchange yesterday -- off from an August, 2000, high of US$90.56.
Thousands of Enron employees have lost their jobs and much of their retirement savings. A 401(k) retirement plan that made many of them heavily dependent on company stock came under fire at a congressional hearing last month when employees said they were unable to sell their holdings when the stock price plunged.
In other developments yesterday, Enron bankruptcy judge Arthur Gonzalez put off ruling on whether to compel Jeffrey McMahon, Enron chief financial officer, to testify about why the company filed for Chapter 11 protection in New York rather than Houston.
Dynegy and other unsecured creditors want Mr. McMahon to give deposition testimony on Enron's choice of venue for the bankruptcy filing. They've asked Judge Gonzalez to transfer the largest bankruptcy case ever to Houston, where Enron is based.
Enron opposes the request to order Mr. McMahon's testimony, calling it "unnecessary, unduly burdensome, and disruptive."
"Courts have repeatedly recognized that demands for depositions of high-ranking corporate officers are often misused as a tool of harassment and should not be allowed unless there is no other source for the same information," Enron said in a motion filed Monday seeking to quash the request.