Enron executives keep quiet at Congressional hearings
Newly-appointed CEO testifies he tried to rein in undisclosed deals
By PETE YOST
Associated Press

WASHINGTON — Four current and former Enron executives took the Fifth Amendment and refused to testify to Congress on Thursday, while Enron’s new chief operating officer said he was thwarted when he tried to rein in deals that led to the company’s bankruptcy.

Jeffrey McMahon said he was transferred to a new job shortly after he complained about the deals in a 30-minute meeting in March 2000 with then-chief executive officer Jeffrey Skilling. McMahon was treasurer at the time of the meeting.

“His parting words to me were he understood all my concerns and he would remedy the situation,” McMahon told a House subcommittee. McMahon said Skilling called shortly after the meeting and offered him a job elsewhere in the company.

McMahon was named Enron’s president and chief operating officer last week.

His testimony followed the refusal by former Enron chief financial officer Andrew Fastow and ex-executive Michael Kopper to testify. The two are at the center of the partnerships which kept hundreds of millions of dollars in Enron debt off the company’s books.
“On the advice of my counsel I respectfully decline to answer the questions,” said Fastow.

After telling the committee that would be his answer to all questions posed by the panel, Fastow was dismissed.

Kopper also invoked the constitutional protection against self-incrimination. Kopper saw an investment of $125,000 become $10.5 million in less than three years.

After Kopper departed, two current Enron executives, Richard Buy and Richard Causey, also declined to answer questions. Both had knowledge of the partnerships that Fastow and Kopper ran.

Fastow and Kopper collected $40 million for their role in the partnerships — which investigators say involved self-dealing and conflicts of interest that eventually led to the energy trading company’s collapse.

Fastow was sworn in by Rep. Jim Greenwood, chairman of the House Energy and Commerce oversight and investigations subcommittee. Greenwood was rebuffed when he asked the witness two questions about his handling of company partnerships that hid hundreds of millions of dollars in Enron debt.

“You enriched yourself by tens of millions of dollars” through deals “with your own company,” Greenwood said to him.

As the four current and former Enron executives sat silently in the crowded hearing room, lawmakers called those who drove the company into bankruptcy, “economic terrorists,” “business cowboys” and “corporate thieves.”

“This collapse was not brought about by isolated acts of rogue employees. It required the complicity of far more than a few bad apples,” Greenwood said as he opened Thursday’s hearing.

“Was the selling of your morals ... of your souls, worth it?” asked Rep. Bobby Rush, D-Ill., who said “millions of dreams” of people who lost retirement money were ruined by the Enron crash.

Arthur Andersen auditor David Duncan also has invoked his Fifth Amendment rights and refused to testify before Congress. Duncan was fired last month for his role in the shredding of Enron-related documents.

Among those expected to testify at Thursday’s hearing were former CEO Skilling and 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.

Mintz raised questions with Buy, the chief risk officer, and Causey, the chief accounting officer, about how the partnerships were being handled late in 2000, shortly after becoming 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.

In a May 22 memo to Skilling, 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.

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.

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