-Caveat Lector- ---------------------------------------------------------------------~->
Please send as far and wide as possible. Thanks, Robert Sterling Editor, The Konformist http://www.konformist.com "For too long our culture has said, 'If it feels good, do it.'" "president" George W. Bush Some Enron Executives Seen Facing Criminal Prosecution 2-3-2 WASHINGTON (Reuters) - An internal Enron Corp. report showing the company inflated profits while top employees raked in millions of dollars they should not have received puts some Enron executives in jeopardy of criminal prosecution, key members of Congress said on Sunday. "This is a devastating report. ... It suggests massive problems. This is almost a culture of corruption here," said Sen. Byron Dorgan, the North Dakota Democrat who chairs a Senate Commerce subcommittee that opens hearings on Monday on Enron's Dec. 2 filing of the biggest bankruptcy in U.S. history. Speaking on NBC's "Meet the Press," Dorgan said whether criminal charges should be brought was a Justice Department decision, but "clearly some things have happened here that are going to put some people ... in real jeopardy." Republican Rep. Billy Tauzin, chairman of the House Energy and Commerce Committee, said the report tracked his findings. "Not only were there corrupt practices," he said. "Not only was there hiding of the fact that debt was being put off the balance sheets and profits that were reported that didn't exist, but we're finding more than that ... what may clearly end up being security fraud." "Officers all the way to the board of directors have some responsibility," Tauzin said, adding the report even mentioned Ken Lay, the former Enron chairman, who is due to testify at the Senate subcommittee hearing on Monday. Houston-based Enron, once the seventh-largest company in America, collapsed in a cloud of debt and questions about its finances and accounting practices. It is under investigation by nine congressional committees, the Justice and Labor departments and the Securities and Exchange Commission. An Enron internal inquiry released on Saturday said the company inflated its profits by nearly $1 billion and top employees took in millions of dollars "they should never have received" through complex partnerships that played a major role in the company's collapse. While the report's findings were called "extremely self-serving" by Andersen, the accounting firm that was Enron's auditor for nine years, its findings have already begun to provide fresh fodder for four days of congressional hearings beginning on Monday. The report concluded that partnerships with names such as LJM1, LJM2 and Chewco were used to do deals meant to hide losses, fatten profits and enrich corporate executives at the former energy trading giant, which was President Bush's biggest political contributor. Copyright � 2002 Reuters Limited. All rights reserved. ***** Bush Brushes Off Demand for Enron Prosecutor Tue Feb 5, 5:27 PM ET By Randall Mikkelsen PITTSBURGH (Reuters) - President Bush on Tuesday brushed off an appeal by a key senator to appoint a special prosecutor to lead an investigation into the collapse of Enron, saying his Justice Department could handle it. Senate Commerce Committee Chairman Ernest Hollings, a South Carolina Democrat, broke the overall bipartisan tone of the Enron investigations on Monday with a call for the appointment of a special counsel in light of Bush administration links to Enron Corp. . Answering questions from reporters as he toured a medical lab, Bush gave no indication that he would call for a special counsel, an investigator outside the normal Justice Department channels similar to the special prosecutors who were a staple of the scandals of the presidency of Bill Clinton. "This is a business problem. And my Justice Department is going to investigate, and if there's wrongdoing, we'll hold them accountable for mistreatment of employees and shareholders," Bush said. Asked whether he did not see a need for a special counsel, Bush said: "I see a need for laws. I see a need for a full investigation, and that's what we're providing." Bush called on Congress to approve his pension reforms to try to avoid a repeat of what happened in the Enron bankruptcy when thousands of employees saw their retirement accounts wiped out by the company's collapse. In its investigation, the Justice Department has told the White House to preserve all its records in case they might be needed later. The Justice Department said on Monday appointment of a special counsel was not warranted and the Republican National Committee denounced Hollings' comments as "blatant partisanship." Houston-based Enron was a generous political donor to both parties, although it tilted its money toward Republicans and was especially generous to Bush's 2000 presidential campaign. Hollings said he had no confidence in the Justice Department. He cited Attorney General John Ashcroft's decision to recuse himself from the case because of Enron campaign contributions. "We've got an Enron government," Hollings told a news conference. On Capitol Hill, Senate Majority leader Tom Daschle, a South Dakota Democrat, said while there are questions about how the Justice Department could handle the probe, he saw no need for a special prosecutor, at least not yet. "I think there are a lot of skeptics, but we're watching with great interest and attention," Daschle told reporters. "And at least as we go forward, we're going to give them the benefit of the doubt." The White House noted Enron had made campaign donations to both political parties. Bush has denied helping Enron as it fell apart last year. "It was very disappointing because this is a time when Democrats and Republicans need to work together to treat this as a serious issue, as a criminal investigation of wrongdoing, and to act together to protect pensions," said White House spokesman Ari Fleischer. ***** Tuesday February 5 7:33 PM ET Enron Auditor Denies Role in 'Hidden' Losses By Kevin Drawbaugh WASHINGTON (Reuters) - Long-time Enron Corp. auditor Andersen played no role in creating off-the-books partnerships used to hide losses and enrich executives before the energy trader's violent implosion, Andersen's CEO said on Tuesday. Also on Tuesday, former senior Enron employees told Congress the once- giant energy trader gave millions in bonuses to top executives two days before filing for bankruptcy last year, then fired thousands of employees without the severance pay to which they were entitled. And disgraced former Enron chairman Kenneth Lay agreed to appear before Congress next week after failing to show up for a hearing on the advice of his attorney, who cited what he called a prosecutorial tone in Congress. However, he was expected to invoke his legal right not to answer questions. Andersen CEO Joseph Berardino told the House Financial Services capital markets subcommittee that the special Enron committee led by William Powers, dean of the University of Texas Law School, had rebuffed Andersen's attempts to offer information about Enron's spectacular collapse. ``We begged them to talk to us,'' Berardino told the congressional panel. ``This committee did not talk to us.'' The hard-hitting Powers Report, released on Saturday, alleged Andersen was closely involved in the creation of the shadowy web of partnerships used by Enron to hide debt. The chief of America's fifth-largest accounting firm said it did not know about transactions involving the partnerships. Contrary to the Powers report, he said, Andersen did not help develop those partnerships. ``We did not help to establish. We reviewed the accounting that others developed,'' he said. Enron fired Chicago-based Andersen as its auditor on Jan. 17, ending a long relationship in which some Andersen accountants ended up working for Houston-based Enron. ACCOUNTING INDUSTRY REFORMS Andersen's involvement in the Enron affair has sullied the firm's reputation and those of other accountants, setting off a wave of concern in markets about financial reporting. Responding to market concerns, Berardino called for changes to the accounting industry in response to the Enron affair, which he called ``painful, but instructive.'' He said U.S. accountants should drop their simplistic ''pass/fail'' corporate auditing system and replace it with more flexible quality grades and ``plain English'' auditing reports. Touching on a sore point for Andersen, which has said it was left in the dark by Enron on some questionable transactions, Berardino suggested ``making it a felony to lie, mislead or withhold information from the auditor.'' Speaking to the Senate Governmental Affairs Committee, Deborah Perrotta, a former senior administrative assistant at Enron, said the $105 million in bonuses paid to Enron's top executives before its collapse compared to about $150 million in severance payments owed to 4,500 fired employees. Only a fraction of those payments have been made. In another development in the widening scandal, President Bush appeared to rebuff a call to name a special prosecutor to probe Enron's collapse. Speaking to reporters in Pittsburgh, Bush brushed off an appeal by a key senator to appoint a special prosecutor to lead an investigation into Enron's collapse, saying his Justice Department could handle it. Senate Commerce Committee Chairman Ernest Hollings, a South Carolina Democrat, broke with the bipartisan tone of the Enron investigations on Monday to call for a special counsel due to Bush administration links to Enron. ``This is a business problem. And my Justice Department is going to investigate,'' Bush said. Asked whether he did not see a need for a special counsel, Bush said: ``I see a need for laws. I see a need for a full investigation, and that's what we're providing,'' rejecting a prosecutorial tool that was a staple of the scandals surrounding former President Bill Clinton. Enron was a generous political donor to both parties, although it tilted its money toward Republicans and was especially generous to Bush's 2000 presidential campaign. Treasury Secretary Paul O'Neill, meanwhile, said the Bush administration would push for more accountability from corporate chieftains in a revamp of business disclosure laws. ``The key is accountability and responsibility for corporate officers and directors, accountants and auditors,'' O'Neill said in testimony prepared for the Senate Banking Committee. The Treasury Department, Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission have been charged by Bush with finding ways to close loopholes in the nation's corporate accounting system. ***** Senate Panel Votes To Subpoena Kenneth Lay 2-5-2 WASHINGTON (CNN) -- The Senate Commerce Committee voted Tuesday to issue a subpoena to compel former Enron CEO Kenneth Lay to appear before the committee. Republicans and Democrats on the panel unanimously supported the efforts to subpoena Lay, who backed out of his planned testimony Monday before a Commerce Committee subcommittee because of what his attorney predicted would be a "prosecutorial proceeding." Lay is likely to appear before the panel next week. In addition, the House Financial Services Committee had hoped to subpoena Lay to appear Tuesday but did not after Lay's attorney said Monday he didn't know how to reach his client in time. The attorney, Earl Silbert, said it would be "unreasonable" for Lay to appear Tuesday because "he's not here in Washington." He said the former Enron chief left Washington late Sunday or early Monday for Houston, Texas. Lay was in Houston on Tuesday morning. After the Senate committee voted to issue the subpoena, U.S. Sen. Byron Dorgan, D-North Dakota, said he "regrets that we've gotten to this point" and called the investigation into Enron "very serious business." During the Senate hearing, Dorgan said, "When you juxtapose what happened to the people at the top and what happened to the people at the bottom it makes you sick." Dorgan mentioned an Enron employee whose retirement fund shrank from $330,000 to a little more than $1,000 and an executive who parlayed a $25,000 investment into $4 million within 60 days. U.S. Sen. Kay Bailey Hutchison, R-Texas, said she was concerned about political rhetoric on the matter and said "all of us are equally concerned about what has happened." "I want the facts. I want to protect people in the future," she said. U.S. Sen. Ron Wyden, D-Oregon, said thousands of people in his state have been hurt by the collapse of the company. He urged that the committee stay on the inquiry into Enron "until we get all the facts on the table." A couple of senators, such as John Breaux, D-Louisiana, and Conrad Burns, R-Montana, said they doubt that Lay would testify once he appears. Lay was to testify Monday about the collapse of the Houston-based energy trading company but refused to show up for two congressional hearings. As a result, the Senate Commerce subcommittee hearing was canceled, but the House Financial Services Committee proceeded with an afternoon subcommittee hearing. An attorney for Lay said his client will appear before congressional panels at a later date. Meanwhile, Arthur Andersen CEO Joseph Berardino appeared Tuesday morning before the Capital Markets subcommittee of the House Financial Services Committee. His firm was formerly Enron's auditor. In a prepared statement, Berardino listed a number of actions that Andersen is taking in the wake of Enron's collapse. He announced that former Federal Reserve Board Chairman Paul Volcker agreed to chair an independent oversight board to work with Andersen in making changes in its audit practice. "Andersen and this committee share common goals to get to the truth about what happened at Enron and to help develop policies that will improve our capital markets, enhance audit quality and better protect the investing public," Berardino said. He called for "working with the management and the audit committee of every publicly traded U.S. audit client to establish a formal process for determining the acceptable scope and level of fees for those nonaudit services that Andersen will continue to provide." He said offices of audit quality and ethics and compliance will be created. "The changes we have announced are meaningful, significant and helpful," Berardino said. Other congressional panels Tuesday are also dealing with issues involving Enron. The Senate Governmental Affairs Committee is meeting to discuss the impact of the Enron bankruptcy on 401(k) plans. The House Energy and Commerce Committee's Oversight and Investigations subcommittee began its hearing, where William C. Powers Jr. is testifying. Powers, who authored a recent internal review critical of Enron practices, is a member of Enron's board of directors and dean of the University of Texas Law School. http://www.cnn.com ***** http://chicagotribune.com/business/chi-0202050258feb05.story?coll=chi% 2Dbusiness%2Dhed >From the Chicago Tribune Critics: Probe 'pretty soft' on Enron board Directors' report called attempt to redirect blame By Robert Manor, Stephen J. Hedges and Melita Maria Garza, Tribune staff reporters February 5, 2002 The report commissioned by Enron Corp.'s board on the company's stunning collapse castigates the company's auditors and former managers, but its more benign tone toward the board itself is drawing criticism from outside observers. While Enron's board of directors had a clear duty to oversee Enron's business operations and accounting practices, they say, the report goes to some lengths to portray board members as passive participants duped by the deceptions of Enron managers. "It might not have been a whitewash," said Patrick McGurn, vice president of Institutional Shareholder Services, which advises institutional investors on corporate governance issues. "But it goes pretty soft on the board." Late last year Enron's board commissioned the dean of the University of Texas law school, William Powers, to lead a committee to investigate Enron's troubled partnership deals. Powers is on Enron's board, as are the other two people on the committee, Herbert Winokur and Raymond Troubh. The panel's report was released over the weekend, and its contents are now being aggressively questioned. Critics say the report comes close to apologizing for the Enron directors' failures, pointing to various statements in it that seek to direct blame toward Enron's top executives and Chicago-based Andersen. "The board appears," the report says in one such reference, "to have reasonably relied upon the professional judgment of Andersen [Enron's auditor] concerning Enron's financial statements." The report does contain some comments that are critical of the Enron board. Of the accounting procedures that were used to hide huge Enron debts and losses in a group of outside partnerships, for example, Powers' report says the problems "could have and should have been prevented or detected at an earlier time had the board been more aggressive and vigilant." The report's goal, McGurn said, may have been to portray the board as bumbling, but not criminally involved in the dealings that brought Enron down. "The best-case scenario for the board was to paint themselves as lazy and maybe a little bit stupid, and that's how they come out in the report," McGurn said. "From their standpoint, that is good." A spokesman for Enron and its board of directors denied that there were any ulterior motives in the board hiring one of its own to investigate itself. "I think one would be stretched to say there was any compromise in the Powers report," said Vance Meyer. "The board's objective in hiring Powers was finding someone who was highly qualified for the task. The board felt that he was." For virtually every transgression the report says the board committed, it also suggests mitigating factors. In some cases, the report says, the board could not comprehend the transactions that were proposed. In other cases, it says, the board was kept in the dark and possibly lied to about the details of the partnerships. "No one in management stepped forward to address the issues as they arose to bring the apparent problems to the board's attention," the report says. Powers, the report's author, pressed the point in testimony Monday before a House subcommittee, repeatedly saying that the Enron board did not approve questionable transactions by Enron managers. "On particular facts," Powers testified, "the board was misled." Nell Minow, a shareholder activist in corporate governance issues, said the board's decision, in effect, to investigate itself rather than turn over the inquiry to an independent third-party undermines the report's conclusions. "I think it is best to bring in someone from the outside, if only to establish your credibility," Minow said. Moreover, the report's main author has deep ties to Enron. Enron has given $250,000 to Powers' law school and $3 million to the university since 1998. Enron's law firm, Vinson & Elkins, endowed a chair at the law school. Other Enron directors, meanwhile, have had business dealings with the company. In the early 1990s, director Roger Belfer established a company, Belco Oil & Gas. Enron was one of his company's customers. Since 1996, Enron's proxy statement has noted that "Belco Oil & Gas Corp. has entered into natural gas and crude oil commodity swap agreements and option agreements with Enron Capital & Trade Resources Corp." In 2000, Enron received $33 million related to those agreements. Other directors had looser but still profitable dealings with once- mighty Enron. John Urquhart, a former Enron director, has since 1991 been a consultant to Enron and, more recently, to Chairman Kenneth Lay. In 2000, Enron paid Urquhart $493,914 for consulting. That's on top of Urquhart's $50,000 annual director's fee and the $10,000 he received for serving on a committee. Urquhart also served as a director of Enron Renewable Energy Corp. until last year. For that work, Enron awarded him options to buy 115,000 shares of stock. When Enron Renewable merged with another Enron subsidiary, Enron allowed Urquhart to cash out his options for $2.4 million. Urquhart was also a member of Enron's finance committee. Winokur, a member of the committee that produced the report, has been a director since 1985. Winokur is also affiliated with the National Tank Co., an oil industry supplier, which in 2000 received $370,294 in sales from Enron, according to Enron's most recent proxy. Lord John Wakeham, a former British energy minister, was both an Enron director and a consultant to the company. Wakeham received $70,000 last year in consulting fees, as well as another $70,000 as a board member. Meyer, the Enron spokesman, said there was nothing secret about the directors' financial relationships with Enron. "I would only point out that all of these business dealings have been properly disclosed in our proxy statement," Meyer said. Among the 15 outside directors who served on Enron's board last year, Wendy Gramm has received the most attention. The wife of Sen. Phil Gramm (R-Tex.), Wendy Gramm once chaired the Commodity Futures Trading Commission. In her final days there in 1993, she lifted restrictions on energy trading by companies like Enron. She was appointed to Enron's board a few weeks after leaving the commission. Gramm has said she sold most of her Enron holdings, worth about $288,000, in the late 1990s, around the time the Senate introduced a bill to make her 1993 regulatory ruling the law. The bill passed with her husband as a sponsor. Copyright � 2002, Chicago Tribune If you are interested in a free subscription to The Konformist Newswire, please visit: http://www.eGroups.com/list/konformist Or, e-mail [EMAIL PROTECTED] with the subject: "I NEED 2 KONFORM!!!" (Okay, you can use something else, but it's a kool catch phrase.) Visit the Klub Konformist at Yahoo!: http://clubs.yahoo.com/clubs/klubkonformist Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/ <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! These are sordid matters and 'conspiracy theory'�with its many half-truths, mis- directions and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://peach.ease.lsoft.com/archives/ctrl.html <A HREF="http://peach.ease.lsoft.com/archives/ctrl.html";>Archives of [EMAIL PROTECTED]</A> http:[EMAIL PROTECTED]/ <A HREF="http:[EMAIL PROTECTED]/";>ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
