- The Washington Times - Thursday, January 10, 2002

The Justice Department yesterday opened a criminal investigation into Enron Corp. to determine if company executives acted improperly when employees were blocked from selling billions of dollars in plummeting shares from retirement accounts.
The wide-ranging probe, coordinated by the department's criminal division in Washington and involving prosecutors in San Francisco, New York, Houston and several other cities, is expected to focus on concerns that Enron officials concealed growing financial problems to maintain its credit rating in order to obtain cash to run the business.
The Houston-based company filed for bankruptcy Dec. 2 after another Houston firm, Dynegy Inc., its main rival, offered $8.4 billion to buy the ailing company but then backed out of the deal.
Dynegy pulled its offer after Enron eliminated nearly $600 million in debt with earnings revised through 1997, and its credit rating was downgraded to junk status.
Enron also is under investigation by the Labor Department, and the Securities and Exchange Commission.
Justice Department officials declined comment last night.
Enron's Washington attorney, Robert Bennett, said the company was pleased with the prospect of a Justice Department investigation, adding that the inquiry would "bring light to the facts."
"It's a positive development," Mr. Bennett said. "As I understand it, this means there will be a centralized investigation at the Justice Department. It's important that we not let the Washington scandal machine take over, which will have as a consequence that every move will be politicized and the facts will be trivialized."
On Tuesday, the White House acknowledged in a letter to Congress that Vice President Richard B. Cheney or his aides had met last year on six occasions with Enron representatives including a meeting two months before the firm made the largest corporate bankruptcy filing in U.S. history.
Written by David S. Addington, the vice president's counsel, the letter said the meetings including five with staff members and one involving Mr. Cheney himself continued after President Bush released an energy policy developed by the vice president's staff.
The Addington letter was sent in response to a request in December by Rep. Henry A. Waxman of California, ranking Democrat on the House Committee on Government Reform. Mr. Waxman said the letter "shows that the access provided to Enron far exceeded the access provided by the White House to other parties interested in energy policy."
The president's energy plan was released May 17.
The chief executive of Enron's longtime auditing firm, Arthur Andersen LLP, told a House hearing last week that his firm notified Enron's audit committee on Nov. 2 of "possible illegal acts within the company."
Sen. Joseph I. Lieberman, Connecticut Democrat and chairman on the Senate Governmental Affairs Committee, has said his panel will investigate why Enron's auditors allowed the firm to overstate its profits for four years "using what appear now to be very questionable accounting practices."
Mr. Lieberman said the committee also will ask why Enron's board of directors allowed financial arrangements "that some claim were intended to hide company holdings from public view."
Enron created hidden partnerships with entities that assumed the company's debt and thus kept those debts off its books.
Enron, formed in 1985, had as many as 20,000 employees. It was considered the world's top buyer and seller of natural gas and the largest electricity marketer in the country.
The firm also marketed coal, pulp, paper, plastics, metals and fiber-optics. Last year, Enron stock traded at $85 per share. Today, it is less than $1.
Senate Democrats have said they want to investigate whether the Bush administration should have acted sooner to protect investors from the Enron collapse. Hearings in the matter before the Senate Governmental Affairs Committee are expected to begin Jan. 24, the day after Congress returns to work.
Enron Chairman Kenneth Lay is a longtime friend of Mr. Bush and has served as a member of the Bush campaign's Pioneer club, raising nearly $100,000. Mr. Bush has supported government investigations into the bankruptcy of the company that was rated seventh among the Fortune 500 firms last year.
Since the 1989-90 election cycle, Enron has made nearly $5.8 million in campaign contributions, with 73 percent going to Republicans. The company contributed $113,800 to the Bush campaign, including the use of corporate jets, ranking as the campaign's 12th-largest donor.
The firm also gave $100,000 to Senate Democrats one week before filing for bankruptcy.
On Dec. 2, Enron filed for bankruptcy in New York to keep creditors and lawsuits at bay so the company could try to preserve its trading operation.
In a statement, Sen. Susan Collins, Maine Republican, praised the Democrats for starting the probe. She said there were "many questions surrounding the conduct of Enron's top management that need to be answered promptly and publicly."
Mrs. Collins said, "I'm particularly concerned with reports that top executives at Enron were selling their shares of company stock at very high profits while lower-level employees were forbidden from selling theirs."

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