Enron Corp. has agreed to release its tax returns since 1985, as well as those of its affiliates and partnerships, in a Senate Finance Committee investigation into whether the bankrupt company improperly avoided paying taxes.
In a letter to senior committee members, attorney Fred Goldberg said Enron will cooperate by waiving federal tax privacy protections so that Congress can determine whether laws should be changed in the aftermath of the energy-trading company’s downfall.
Sen. Max Baucus, Montana Democrat and the committee’s chairman, said yesterday the panel has begun a “thorough and comprehensive probe” into the use of tax shelters or other devices that might have played a role in Enron’s demise.
In another congressional inquiry, Sens. Joseph I. Lieberman, Connecticut Democrat, and Fred Thompson, Tennessee Republican, said they were sending letters to four federal agencies and issuing subpoenas to Enron and its former auditor, Arthur Andersen LLP, seeking information on company contacts with the agencies.
Mr. Lieberman is chairman and Mr. Thompson the senior Republican on the Senate Governmental Affairs Committee.
The subpoena seeks information about contacts between the company and the Labor Department, the Securities and Exchange Commission, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission; and information about bonuses, deferred compensation and severance payments for Enron executives. Deferred compensation was set aside for later payment in accounts tied to the value of Enron stock.
Knowing Enron was about to file for bankruptcy, executives quickly withdrew millions of dollars in compensation and bonuses in late November that they had deferred. Money was wired to some bank accounts in less than 24 hours.
Through use of tax deductions for stock options, entities in offshore tax havens and tax shelters, Enron appears to have avoided paying corporate income taxes in four of the past five years. The bookkeeping netted a total refund of $381 million, according to an analysis by the labor-funded Citizens for Tax Justice.
On the other hand, Enron had accumulated more than $250 million in credits for alternative minimum taxes, indicating it had paid those in the past.
The investigation also will look into Enron’s employee-compensation arrangements, 401(k) plan and other methods of deferred compensation, Mr. Baucus said.
In a related development, documents released yesterday showed that former Enron Chairman Kenneth L. Lay wrote to President Bush throughout his governorship, seeking support for legislation benefiting the energy giant.
Many of the letters concerned utility deregulation and tort reform. Others were personal. Some 350 pages of correspondence were released by Texas archivists yesterday.
Although Mr. Bush signed a law deregulating the electricity market in 1999, the documents do not appear to show that he responded in print to Mr. Lay’s interest in the issue. Also, Mr. Bush had made clear during his first gubernatorial campaign that tort reform would be a top priority. He signed a sweeping bill into law in 1995.