WASHINGTON – A Senate investigations panel will issue document subpoenas in the coming week to top Enron officials in advance of hearings beginning Jan. 24, the day after the 107th Congress reconvenes, two Senate Democratic leaders announced Wednesday
The Senate Governmental Affairs Committee's Permanent Subcommittee on Investigations will send subpoenas to Enron's board of directors, company officers, and auditor Arthur Andersen, who worked on the company as far back as January 1999, seeking documents relating to Enron's financial administration and sudden collapse.
"The subpoenas are necessary in order to get prompt and thorough review of the documents in question so that we don't have to rely on requests that may or may not be complied with," said subcommittee chairman Carl Levin, D-Mich. "This debacle is so massive it requires speed and thoroughness and the documents subpoenas which we are issuing within the week will insure both speed and thoroughness which otherwise you could not assure to the same degree."
The focus of the inquiry is on how energy giant Enron, a $77 billion company collapsed within weeks without any warning, said committee chairman Joe Lieberman, D-Conn. Enron's December collapse, which followed a suspicious sell-off of stocks by the company's top echelon, resulted in losses of entire retirement savings belonging to thousands of investors and employees who had sunk as much as 50 percent of their 401(k) retirement accounts into the company and were not permitted to sell off their stocks when news of its collapse began surfacing.
The subcommittee will focus on activities of the board, the officers, and the auditors, as well as the use of offshore accounts to establish limited partnerships that merely added to the confusion over the state of Enron's finances.
Specifically, the chairmen said questions will focus on why officials led investors to believe Enron was still a strong company with strong earnings even while it was collapsing, why it overstated its profits for four years by over a half billion dollars, why Enron's officers prevented employees from liquidating their stocks, and the appropriateness of the board's actions in the period before and during the collapse.
"The suddenness with which this company fell is shocking. Even the savviest experts on Wall Street were blindsided," Lieberman said. "More than 60 percent of the American people own stocks and their interest in their investments and retirements is at the heart of this committee's interest in Enron."
The subcommittee is also interested in the conduct of internal and external auditors and why offshore accounts were used to create limited partnerships and external entities, Levin said.
"Either laws and regulations were followed in which case those laws and regulations are pitifully inadequate and our job is to find out where those laws and regs have holes and we must close those holes," Levin said. "The other possibility is that laws and regulations were violated, or a combination of both. In any event, something was very rotten in the state of Enron."
The full committee will later look at broader issues of the failure of federal agencies to spot Enron's problems and the future stability of the deregulated energy industry, Lieberman said.
Lieberman and Levin downplayed any suggestion that their investigation was an attempt to cast blame on Republicans, whose close ties to Enron officials have been called into question.
Enron CEO Kenneth Lay is a close friend of President Bush and substantial contributor to the Republican Party, though Enron's latest $100,000 contributions went to the Democratic Congressional Campaign Committee.
Some observers have questioned whether the close ties between Enron and Bush officials may have prevented the administration from paying adequate attention to Enron's financial undoing, but Lieberman rejected any suggestion that the Bush administration's connections would be a focus of the inquiry.
The committee's ranking Republican, Sen. Fred Thompson, R-Tenn., was closely following Enron's implosion and would work with Democrats, Lieberman said. Levin added that Susan Collins, R-Maine, the ranking Republican on the subcommittee, was "very supportive of the investigation." The two were not at the announcement.
Lieberman said he was interested in the motives behind Enron's active role in the formulation of Bush administration energy policy.
"In fairness and being comprehensive in our investigation, we've got to ask whether the advice rendered was at all self-serving."
The Associated Press contributed to this report.