The Pentagon is setting up a commodity market-style trading system in which investors would be able to bet on political and economic events in the Middle East – including the likelihood of assassinations and terrorist attacks.

Former Enron chairman Kenneth Lay could testify at a US Senate hearing on Tuesday, a week after pulling out of two scheduled appearances when some in Congress suggested he had engaged in criminal activity.

Two members of Congress today said Enron could face prosecution after claiming the company manufactured income out of its off-the-books partnership deals that led to financial disaster.

A US Senator leading the investigation into the collapse of Enron says the corporation did not tell Congress about a web of partnerships it used to hide debts.