Enron Chief Financial Officer to Take the Fifth

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Enron Chief Financial Officer to Take the Fifth

Last Updated: February 03, 2002 01:49 PM ET

WASHINGTON (Reuters) - Enron's former chief financial officer, who is charged with pocketing $30 million from questionable deals that led to the company's collapse, will not answer questions in testimony before Congress, a lawmaker investigating the firm said on Sunday.

Former Enron CFO Andrew Fastow and an aide, Michael Kopper, will invoke their rights under the Fifth Amendment of the Constitution to not incriminate themselves, said Rep. Billy Tauzin. The former Enron officers have been subpoenaed to testify before a subcommittee of the House Energy and Commerce Committee, which the Louisiana Republican chairs.

"They will be before the committee on Thursday and Fastow will take the Fifth, Kopper will take the Fifth," Tauzin said on NBC's "Meet the Press."

Jeffrey Skilling, Enron's former chief executive officer, will answer questions, Tauzin said.

Fastow was singled out for harsh criticism in an internal Enron report that was released on Saturday. The report blasted former company executives for their role in creating a complex web of outside partnerships that were used to hide Enron debt and losses.

The report has been criticized as "extremely self-serving" by Andersen, the accounting firm that audited Enron until the company filed for bankruptcy Dec. 2.

Fastow and Kopper would not be the first players in the Enron saga to refuse to testify citing the right against self-incrimination.

Fired Andersen partner David Duncan invoked his Fifth Amendment rights before a congressional panel last week. Duncan has been accused by his former employer of ordering the destruction of documents relating to the Enron case.

Duncan has said through his lawyer he did nothing improper.

Houston-based Enron, once the seventh-largest company in America, collapsed in a cloud of debt and questions about its finances and accounting practices. It is under investigation by nine congressional committees, the Justice and Labor departments and the Securities and Exchange Commission.

The Enron internal inquiry released on Saturday said the company inflated its profits by nearly $1 billion and top employees took in millions of dollars "they should never have received" through complex partnerships that played a major role in the company's collapse.

-- (guilty@as.hell), February 03, 2002

Answers

Sunday, 3 February, 2002, 18:55 GMT

Enron executives 'pocketed millions'

Top Enron executives took millions of dollars "they should never have received", a special committee investigating the sudden collapse of the energy giant has charged.

The 217-page report concluding the internal investigation was filed with the New York bankruptcy court as former chief executive Kenneth Lay prepared to give testimony to a congressional committee on Monday.

The independent committee set up by Enron after its bankruptcy has found that an elaborate scheme, which involved multiple partnerships that hid Enron's debts and allowed it to overstate profits by 1bn, was the key to the company's collapse.

It has also accused the Andersen firm, which audited Enron's accounts, of knowing about the flawed scheme.

'Massive problems'

The document revealed that Mr Lay personally approved the partnership set-up, though he is not accused of making any financial gain.

According to the findings, the accounting firm Andersen billed the company $5.7m "above and beyond its regular audit fee" for helping to set up the ill-fated partnerships.

"This is a devastating report.... It suggests massive problems. This is almost a culture of corruption here," said Senator Byron Dorgan, chairman of a Senate Commerce subcommittee on NBC's 'Meet the Press'.

Senator Dorgan's sub-committee will open hearings into the biggest bankruptcy in US history on Monday.

Andersen rebuts

The findings were described as "extremely self-serving" by Andersen, which Enron dismissed as its auditor after the collapse.

"The authors of this report, whose independence has already been questioned, were hand-picked by Enron's board," said Andersen spokesman Charlie Leonard.

The report said Enron's board "cannot be faulted for failing to act" on important information on the partnership deals which was withheld, but it criticised the board for not asking more questions about the transactions.

The committee, headed by Enron director William Powers, the dean of the University of Texas School of Law, also said that the investigators had only limited access to Andersen's Enron audit work papers.

But Andersen's spokesman dismissed the allegation.

"The report falsely states that Andersen did not co-operate with the authors. On the contrary, the authors rebuffed several attempts by Andersen to provide input to the report," Mr Leonard said.

Big stakes

The investigation revealed that former Enron chief financial officer Andrew Fastow pocketed at least $30m, and that another executive, Michael Kopper, made at least $10m.

Four other executives are said to have taken sums varying from several hundred thousand dollars to $1m.

Meanwhile, more than 4,000 workers have lost their jobs, and thousands more have lost their retirement savings in company stock which has become all but worthless.

Enron rank-and-file employees were prevented from selling their fast depreciating stock holdings, while top executives got rid of them before the shares tumbled.

"I'll save all comment on the report for my congressional testimony," said Mr Powers.

Enron is under investigation by nine congressional committees, the Justice Department, the Securities and Exchange Commission and the Labor Department.

-- (in@related.story), February 03, 2002.


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