WASHINGTON - The highest-ranking Enron Corp. executive to undergo congressional questioning in the company's downfall says he didn't know the details of a complex web of partnerships that concealed some of the energy trading company's debt.
Jeffrey Skilling was to testify Thursday along with former Enron attorney Jordan Mintz, who became so concerned about whether the off-the-books partnerships were proper that he tried to rein them in.
``We have found substantial evidence of illegal activity by Enron and its management,'' Rep. Billy Tauzin, R-La., said Wednesday at a hearing of the House Energy and Commerce Committee that he chairs.
The company's actions ``served to deceive the public about Enron's financial condition,'' Tauzin said. ``It artificially pumped up Enron's stock price and allowed these same executives to enrich themselves with sales of Enron stock.''
Four of Skilling's former colleagues with knowledge of the partnerships were expected to take the Fifth Amendment when they appeared Thursday before the House oversight and investigations subcommittee, which is part of the Commerce Committee.
They were former chief financial officer Andrew Fastow, who made at least $30 million in running several of the partnerships; Michael Kopper, who got at least $10 million; Richard Causey, Enron's chief accounting officer; and Richard Buy, the chief risk officer.
Mintz raised questions with Buy and Causey about how the partnerships were being handled late in 2000, shortly after Mintz became the general counsel for Enron Global Finance.
In memos, Mintz insisted Skilling sign off on one partnership arrangement before it could proceed. Six people signed an approval sheet, but the line next to Skilling's typed name is blank. Causey and Buy were among those who signed.
Skilling's lawyers said his approval wasn't required. But ``based on the documents it looks to us like Skilling wanted to keep his fingerprints off the partnerships,'' said Ken Johnson, the Commerce Committee's spokesman.
In a memo to Skilling on May 22, Mintz wrote: ``I can send such approval sheets to you as a package and you can then sign at your convenience.'' Twelve days earlier, Mintz had gone to an outside law firm because of his concerns about whether the partnerships were proper.
An internal review of Enron conducted by University of Texas law school dean William Powers found that Skilling personally supported the board of director's decision to permit Fastow to proceed with the partnerships.
``It is difficult to understand why Skilling did not ensure that ... controls were rigorously adhered to and enforced,'' Powers' review said.
``Based upon his own description of events, Skilling does not appear to have given much attention to these duties,'' the report added. ``Skilling, who prides himself on the controls he put in place in many areas at Enron, bears substantial responsibility for the failure of the system of internal controls.''
A dozen congressional committees are investigating the Houston-based energy-trading company, as are the Securities and Exchange Commission and the Justice Department. Enron entered the biggest bankruptcy in U.S. history on Dec. 2.
Millions of investors lost money, and thousands of current and former Enron employees lost the great bulk of their retirement savings when the company collapsed.
As a result, President Bush has called for legislation granting greater protection for the retirement accounts of average Americans.
Congressional investigators are interested in the fact that in connection with one of the outside partnerships, a family foundation run by Fastow turned $25,000 into $4.5 million over a two-month period. Kopper saw an investment of $125,000 become $10.5 million in less than three years. Lesser players, brought into the network of transactions by Fastow and Kopper, earned $500,000 to $1 million from investments of less than $5,800.
Meanwhile, Democratic Sen. Ernest Hollings and Republican Ted Stevens urged their leaders to set up a single select committee for the chamber's investigation because so many panels were investigating Enron, which has been a heavy campaign donor to both political parties over the years.
``The issues range from consumer fraud, artificial energy price spikes, the loss of the Enron employees' pension fund'' to ``SEC regulation and compliance,'' they said in a letter to Senate Majority Leader Tom Daschle and Minority Leader Trent Lott.
Friday
March 14th, 2025
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