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Enron's top 200 execs paid themselves $1.4 billion in 2000
Panel hears how Texas firm arranged to avoid almost all federal taxes
Peter Behr, Washington Post
Friday, February 14, 2003
�2003 San Francisco Chronicle | Feedback
URL:http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/02/14/BU241090.DTL
Washington -- Enron Corp.'s 200 highest-paid executives received total
compensation of $1.4 billion in 2000, more than triple the amount the year
before, and more than the company's $979 million in reported corporate
profit, according to a three-volume report the congressional Joint
Committee on Taxation issued Thursday.
The executives' compensation, mostly stock option awards, enabled the
Houston company to wipe out nearly all its federal tax obligations that
year.
While its compensation strategy was erasing tax bills in the late 1990s,
Enron was turning its tax department into a profit center, the report
found.
Its senior executives joined with leading accounting, banking and legal
advisers to manipulate tax laws through complex, concealed transactions
that generated $651 million in artificial profit between 1995 and 2001, the
report said. Enron paid these advisers $88 million in fees in that six-year
period in a relationship the committee called incestuous.
Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee,
said at a hearing on the report that he intended to introduce legislation
that would bar other corporations and their outside advisers from imitating
Enron's "tax schemes," effective with Thursday's hearing. "I don't care if it
takes five years to get the legislation passed, the date will hold," he said.
Without new sanctions, the Internal Revenue Service will continue to be
outwitted by corporate tax filers, as it was by Enron and its advisers, the
report said.
The committee's top Democrat, Sen. Max Baucus, D-Mont., endorsed
Grassley's pledge, calling the report a wake-up call on corporate tax
abuse.
One Republican tax lobbyist said the Enron tax report has caused a rush of
anxiety among Washington's law firms. Some worry that lawmakers will try
to use the joint committee's loophole-closure recommendations to offset
some of the cost of President Bush's $665 billion tax cut plan, the lobbyist
said. So the business community is gearing up for a major fight.
The joint committee's report, released after a yearlong investigation,
stunned Lindy Paull, the committee's longtime chief of staff, she said.
Hundreds of pages of confidential flow charts describe how Enron
engineered swaps of assets and securities between its divisions and some
of its financial partners to accelerate billions of dollars in tax deductions.
In some cases, deductions were counted twice. Other deals allowed Enron
to deduct loan principal payments, not merely interest. Other transactions
appeared to shuffle paper between Enron units, with little of real value
changing hands, the committee found.
Grassley called the practices "a little bit short" of racketeering.
�2003 San Francisco Chronicle | Feedback
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