Obstruction of justice possible in Enron Corp. collapse
By H. Josef Hebert
Associated Press

WASHINGTON — The timing of an accounting firm’s memo directing the destruction of documents raises the serious possibility of obstruction of justice, says the chairman of a Senate committee investigating Enron Corp.’s collapse.

Sen. Joseph Lieberman, D-Conn., said Sunday he was troubled that a lawyer at Arthur Andersen & Co., Enron’s accounting firm, directed the destruction of Enron documents.

The memo from a lawyer was dated Oct. 12, 2001, when Andersen and executives of the energy giant “knew that Enron was in real trouble and the roof was about to collapse on them,” Lieberman said.

Rep. John Dingell of Michigan, senior Democrat on the House Commerce Committee, said Monday that the panel’s investigation will focus on allegations of insider trading, “payoffs for the company executives who were permitted to sell” their Enron stock and “most importantly, the fact that papers were destroyed and there were instructions to do so.”

“There’s pretty strong evidence of insider trading, there’s clear evidence of failure to file honest and correct reports,” Dingell said on CBS’ “The Early Show.” “False accounting appears to be a very major problem.”

Two Cabinet members, meanwhile, said they had seen no need to inform President Bush of telephone conversations they had with Enron Chairman Kenneth Lay in late October and November as Enron was struggling to maintain its credit rating.

Commerce Secretary Don Evans said Sunday he discussed the calls with Treasury Secretary Paul O’Neill, who also had been contacted by Lay, and later told Andrew Card, White House chief of staff, but that Card never informed the president.

Presidential spokesman Ari Fleischer said the White House was not determining whether any other Bush aides had been contacted about the Enron situation.

“The White House will continue to be helpful to people with real and specific questions.

But if people want to know every contact with anybody about anything, that is a fishing expedition,” Fleischer said.

Lay called Evans Oct. 29 to see what the administration might do to help Enron with its credit problems, said Evans, but he offered no assistance. O’Neill, who described his call as “a heads up” from Lay on Enron’s financial situation, also said he offered no assistance.

The memo from an Andersen lawyer was uncovered by congressional investigators and first reported by Time magazine.

Andersen, one of the nation’s biggest and most influential accounting firms, disclosed last week that some documents related to Houston-based Enron had been destroyed, but the company gave no additional details.

On Sunday, after the memo became a subject on the television talk shows, Andersen released a statement acknowledging “there were internal communications that raise questions” in connection with the Enron documents.

“Andersen is committed to getting the facts and taking appropriate actions in the Enron matter,” the statement said, adding that “it would be inappropriate to comment further.”

Lieberman, whose Governmental Affairs Committee plans the first Senate hearings into the Enron matter Jan. 24, said that at the time of the Andersen memo, executives of both companies knew a corporate scandal was brewing.

“So this kind of memo raises very serious questions about whether obstruction of justice occurred,” Lieberman said on CBS’ “Face the Nation.” Four days after the memo, Enron disclosed a third-quarter loss of $618 million and a week later the Securities and Exchange Commission began an investigation into Enron’s use of partnerships to mask losses.

Sen. Carl Levin, D-Mich., chairman of the Governmental Affairs investigations subcommittee, said his panel has issued 51 subpoenas and plans to focus on the “deceptive practices” of Enron, and the failure of its auditors to raise flags about the energy company’s business practices and of its directors as corporate watchdog.

“Managers (at Enron) lined their pockets with hundreds of millions of dollars of stock sales at the same time a corporation was going under, and the stockholders and employees were holding the bag,” Levin said on ABC’s “This Week.”

Enron filed for bankruptcy Dec. 2. By then its stock had plummeted from about $83 a share a year earlier to less than $1 a share. In recent years many Enron executives sold their stock, though some continued to hold large amounts, worth about $1.1 billion.

Other Enron employees were barred from selling stock in their 401(k) retirement fund as the company’s problems became more serious.

Both Evans and O’Neill said Sunday that they learned nothing in their conversations with Lay that was not generally known from news reports and did not view the matter seriously enough to inform the president.

Evans said that in a telephone call on Oct. 29, Lay “reached out to me” in search of ways the government might help Enron head off a possible downgrading of its credit rating. “I considered it and said, ‘Thank you for the call,’” Evans said on NBC’s “Meet the Press.”

The next day Enron’s credit rating, in fact, was downgraded.

O’Neill also said Lay called him about the same time, on Oct. 28, but “asked for nothing” and was offered no help, nor was word of the calls passed on to Bush. “I don’t ... tell the president every time somebody calls me,” said O’Neill on “Fox News Sunday.”

Lieberman said that so far there is no evidence that the Bush administration “was somehow involved in wrongdoing in the collapse of Enron.”

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