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Archive for Thursday, February 21, 2002

Documents show ex-Enron chairman

February 21, 2002

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— Former Enron chairman Kenneth Lay offered a seat on the company's board in 1999 to Robert Rubin, who was then Treasury secretary, and lobbied Rubin and his successor on issues affecting Enron, documents obtained Wednesday show.

The notes and letters show that Lay pressed Enron's interests to Clinton administration officials. Last month, the Bush administration disclosed a series of telephone calls from Lay one of President Bush's biggest campaign contributors to members of the Bush Cabinet as the company was sliding toward bankruptcy last fall.

The new documents were provided by the Treasury Department under a Freedom of Information Act request by The Associated Press.

Enron's current chief executive officer, meanwhile, said Wednesday that someone could end up in jail on charges stemming from the government's investigation of the collapsed energy-trading company and the web of partnerships used to hide more than $1 billion in debt that eventually brought it down.

"Given the enormity of the damage that's been created, I think it's going to be difficult to not hold one or more people accountable," said Stephen Cooper, who took the helm of Enron after Lay resigned as chairman last month.

As Congress' investigation of Enron's collapse widened to Wall Street, the House Energy and Commerce Committee plan today to send letters seeking information to about a dozen big investment firms.

Committee investigators are trying to determine whether Enron officials pressured the firms including Merrill Lynch & Co., First Union Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Credit Suisse First Boston to invest in the partnerships or promised them special deals if they did so or raised money from other investors.

Treasury ties

Rubin, who left the government in mid-1999, is chairman of the executive committee of Citigroup Inc., which along with other banks lent hundreds of millions of dollars to Enron, hoping to keep it afloat. Rubin called Treasury's undersecretary for domestic finance, Peter Fisher, last Nov. 8 to seek his intervention on Enron's behalf. At the time, rating agencies were poised to downgrade their opinions on the financial status of Houston-based Enron.

"If you are considering joining any corporate boards, I would like very much to talk to you," Lay wrote Rubin on May 14, 1999, after Rubin announced he was leaving his post. "Given the way Enron has evolved, not only do we badly need a person with your experience and insights ... but also I think you would find serving on our board intellectually and otherwise interesting."

Rubin did not join Enron's board of directors.

The same day, Lay wrote a note to Rubin's successor in the Clinton administration, Lawrence Summers, congratulating him on becoming treasury chief and promising to be available "if there is anything at all I or Enron could do for you or the department."

Potential crimes

Cooper, the new Enron CEO, was asked on ABC's "Good Morning America" if crimes were committed at Enron. He responded, "The crime is that all of these people have been hurt ... the crime is that somebody turbocharged it to the point where it just, poof, blew up."

"I think it is I don't know if it's a high likelihood, but I think that there is some likelihood that ... one or more people could end up ... going to jail," he said.

Investors nationwide lost money on a stock that had been a Wall Street favorite, and thousands of Enron employees were stripped of their retirement savings in accounts loaded with Enron stock as the business collapsed.

Both the Securities and Exchange Commission and the Justice Department are investigating Enron and the role of its longtime auditor, Arthur Andersen LLP.

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