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--- Begin Message --- Make No Mistake: Andersen Told Employees to Destroy Enron Documents
Date: Monday, January 14 @ 09:57:43 EST
(CNN) - Auditing firm Arthur Andersen instructed its employees in a memo to
destroy most of their material relating to Enron just days before the energy
trading company went bankrupt, according to a report in the latest edition
of Time magazine.
As a result, thousands of e-mails and other electronic and paper files
related to the largest bankruptcy in U.S. history no longer exist, the
magazine reported.
The report says supervisors at Arthur Andersen repeatedly reminded their
employees of the memo prior to November 8, when the Securities and Exchange
Commission issued subpoenas for documents as part of its investigation into
Enron, Time reported.
"If this memo is what it looks like, I'm afraid that the folks at Arthur
Andersen could be on the other end of an indictment before this is over,"
Sen. Joseph Lieberman, D-Connecticut, said Sunday on CBS's "Face The
Nation." Lieberman chairs a Senate committee investigating Enron.
Arthur Andersen has acknowledged that its employees destroyed Enron-related
documents, but has not revealed the existence of a memo directing them to do
so.
Two Bush Cabinet officials Sunday defended their contacts with Enron's
chairman and CEO, Kenneth Lay.
Appearing on network news shows, Commerce Secretary Don Evans and Treasury
Secretary Paul O'Neill both said they received phone calls from Lay last
fall.
Evans, appearing on NBC's "Meet The Press," said he did not offer any
assistance to Lay or Enron. O'Neill, a guest on "Fox News Sunday," defended
the government's decision not to intervene as Enron's stock price collapsed.
Lieberman called O'Neill's comments "outrageous" and promised an aggressive
investigation of Enron's collapse.
Meanwhile, the ranking Democrat on the House Government Committee wants Lay
to explain his actions leading up to the company's collapse.
Rep. Henry Waxman of California is investigating Enron and has asked Lay to
explain two e-mail messages sent last year to employees that predicted the
company's stock would rise, even as the company slid towards bankruptcy.
The U.S. Justice Department named veteran federal prosecutor Joshua Hochberg
to lead its probe of Enron. The Labor Department, the Securities and
Exchange Commission, and several congressional committees are also
investigating the sudden collapse of the Houston, Texas-based energy giant.
Enron markets electricity and natural gas, delivers energy and other
physical commodities, and provides financial and risk management services to
customers around the world.
Lawyers for Enron Corp. confirmed Friday that UBS AG has won the bidding war
for the energy firm's wholesale operations. The value of the UBS offer was
unknown. Salomon Smith Barney, a unit of the Citigroup banking organization,
also was in contention for the unit, and BP PLC had expressed interest in
buying some of the assets.
Greenspan, Rubin and Ashcroft
Enron Corp.'s president called a top Treasury Department official several
times late last year as the company was negotiating with bankers for a
credit extension it needed to avoid bankruptcy, administration officials
said Friday.
Undersecretary for Domestic Finance Peter Fisher interpreted the calls as a
request for the administration to intervene and help, but he declined to do
so, administration sources said.
A Treasury spokeswoman said that in one phone call Enron President Lawrence
Whalley urged Fisher to "call Enron's banks."
CNN learned that former Clinton administration Treasury Secretary Robert
Rubin also called Fisher late last year to ask if Fisher could place a call
urging bond rating agencies to see whether there was a way to avoid an
immediate downgrading of Enron's ratings
Rubin is now a senior official at Citigroup, which had a financial exposure
to Enron.
According to two Bush administration officials, Fisher said he did not think
intervening was appropriate and Rubin said he believed "that was a
reasonable position" and did not press the issue, the officials said.
One of the officials said the call "is further evidence that Enron officials
and others lobbied for administration action, intervention, but that nothing
was done because officials did not believe it was the right thing to do."
In addition, Enron Chairman Kenneth Lay called Federal Reserve Chairman Alan
Greenspan on October 26, said a Fed spokesman, who added Greenspan did not
do anything in response to the call because "it would not have been
appropriate."
Justice Department officials told CNN that Attorney General John Ashcroft --
who has recused himself from the Justice Department's criminal investigation
-- met last year with Lay on February 22 at the annual meeting of the
Business Council in Washington. (Full story)
"The attorney general recalls one event where he spoke to a group of CEOs
and was invited on behalf of the group by Ken Lay, who was serving as the
group's vice chairman," a justice official said.
Congressional investigations
On Capitol Hill, lawmakers pledged to get to the bottom of what happened at
Enron. Eight committees or subcommittees were preparing for separate
hearings into Enron in coming weeks.
A Senate investigative subcommittee issued 51 subpoenas Friday to executives
and the board of directors of Enron and Arthur Andersen, Enron's accounting
firm.
"What is evident already is that the company appears to have deliberately
misled investors and its employees and customers about its financial
strength. That in and of itself is very troubling," said Sen. Susan Collins,
R-Maine, a ranking member of the subcommittee.
Collins said, "So far, I have seen no evidence of improper influence with
members of the administration, but I am sure that question will be fully
explored in these hearings."
The Republican-controlled House Energy and Commerce Committee also said it
wants top Arthur Andersen executives to turn over everything in their
personal records relating to their accounting work for Enron.
The request came after the firm disclosed many documents related to Enron
audits had been destroyed.
"We're going to do anything we can do to try to piece this puzzle together,"
said Ken Johnson, a spokesman for committee chairman Rep. Billy Tauzin,
R-Louisiana.
'That dog won't hunt'
Top White House officials, meanwhile, urged what one called "context and
perspective" in media coverage of the developments.
"There are some legitimate questions and some questions we view more as
political," the senior official said.
"But remember this: There is not one allegation of wrongdoing by anyone in
the federal government and it is this administration that decided to
aggressively investigate the company and the related issues," he said.
White House press secretary Ari Fleischer said no single person or office at
the White House has been designated to serve as a repository of information
about administration contacts with Enron.
And, he said, if Democrats in Congress try to make a political issue of the
Enron bankruptcy, "That dog won't hunt."
Sen. Russ Feingold, D-Wisconsin, issued a news release Friday urging the
Bush administration to "take every step possible to remove the appearance of
a conflict in all aspects of this case," including the appointment of a
special counsel "if evidence of impropriety by any high-ranking official
arises."
He also urged "insulating" the investigators and prosecutors involved in the
case, and "immediate and complete disclosure ... of all communications
between high-ranking administration officials and Enron executives."
Senior officials told CNN this week's disclosures were part of a White
House-directed effort to check for all such contacts.
"It is just common sense," one top White House aide said. "We are going to
get asked, so people are being asked to check and double check."
(In accordance with Title 17 U.S.C. Section 107, this material is
distributed without profit to those who have expressed a prior interest in
receiving the included information for research and educational purposes.)
"A society that will trade a little liberty for a little order will lose
both, and deserve neither."
-- Thomas Jefferson
"The price of freedom is eternal vigilance."
-- Thomas Jefferson
When you're wounded and left,
On Afghanistan's plains,
And the women come out,
To cut up your remains,
Just roll on your rifle,
And blow out your brains,
And go to your Gawd,
Like a soldier.
--Rudyard Kipling
http://www.absurd.org/
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