Enron probe: Ex-chairman pulls out of testimony

Former Enron chairman Kenneth Lay pulled out of this week’s scheduled congressional testimony as members of Congress suggested he and other company executives engaged in widespread criminality.

Enron’s chairman ‘‘cannot be expected to participate in a proceeding in which conclusions have been reached before Mr Lay has been given an opportunity to be heard,’’ his attorney, Earl Silbert, said yesterday in letters to the Senate and House panels that were to hear from him.

The Senate Commerce Committee cancelled its hearing after Lay pulled out.

Lay’s decision came the day after a review of Enron’s activities by University of Texas law school dean William Powers concluded that the company’s management concealed financial information from the public.

Republican Senator Peter Fitzgerald said on NBC television’s Today programme that ‘‘Ken Lay obviously had to know that this was a giant pyramid scheme - a giant shell game’’.

Representative Billy Tauzin, a Republican, asked whether ‘‘maybe somebody ought to go to the pokey (jail) for this’’.

Dorgan, a Democrat, called Enron ‘‘almost a culture of corporate corruption’’ and said the Powers report is ‘‘a pretty devastating indictment of things that went on inside the corporation. The report would suggest that as CEO, Mr Lay certainly was aware of much of this.’’

‘‘We’re going to meet with the committee members and have a discussion about what we do next,’’ Dorgan said last night. Dorgan dismissed Silbert’s suggestion that the hearing would be ‘‘prosecutorial’’ in tone, saying that the comments by members of Congress simply reflect assessments ‘‘by Enron’s own accounting firm regarding potentially illegal acts’’.

‘‘It was clear to us that he was looking for any little excuse to wiggle off the hook,’’ said Ken Johnson, a spokesman for the House Energy and Commerce Committee, which had planned to invite Lay to testify later this month.

‘‘As the old saying goes, ‘you can run but you can’t hide’,’’ and if Lay refuses to testify, he said: ‘‘he’ll be subpoenaed like everyone else.’’

In his letters to Senator Ernest Hollings of South Carolina and Republican Representative Michael Oxley of Ohio, Silbert said: ‘‘Mr Lay firmly rejected any allegations that he engaged in wrongful or criminal conduct.’’

Hollings chairs the Senate Commerce Committee, Oxley the House Financial Services Committee.

The Powers review of Enron also stated that a key document was missing from a partnership deal. Lay says he was unaware of the transaction and former Enron chief executive officer Jeff Skilling says he was unaware of the terms.

‘‘We have not located any Enron Deal Approval Sheet ‘DASH’ an internal document summarising the transaction and showing required approvals,’’ stated the report.

The report noted the same type of situation in another transaction as well, and the report raised the possibility that no approval sheet was ever prepared.

Tauzin said that Skilling backed away from signing his name to off-the-books partnership deals.

‘‘What does that say about his knowledge of whether these deals were honest or corrupt?’’ Tauzin said.

‘‘We found out that one of the good guys ... went to Skilling and brought him all these deals to get his signature on it,’’ Tauzin said. ‘‘He refused to sign it.’’

Citing a company rife with conflicts of interest, Tauzin said that in one deal, a man and his girlfriend at Enron actually negotiated with each other.

‘‘They were really sweethearts, ended up getting married,’’ said Tauzin. ‘‘When they signed the deals, they signed as married partners, one against the other.’’

Dorgan said the question of criminality is ‘‘a judgment for the US Justice Department’’ to make, but he added that ‘‘1 billion dollars in profit was booked here that didn’t exist. That’s trouble.’’