Flood O bits.
Adam L. Beberg
Thu, 10 Jan 2002 16:33:40 -0800 (PST)
Oy, what a busy news day on the newswire, Agentina (still) in a death
spiral, Israel, India, and China all in a mess.... and of course...
Looks like the Enron mess is gonna make that Lewinski thing look like the
trivial thing is was, and has Bush and Ashcroft running for cover: [below]
Also seems Author Anderson "lost" all the documents er... evidence against
Oh and remember PG&E? Thay are in deep dodo again - this was brought up
during the balckouts but it's actually resurfacing, yay!:
What a day to be without cable :(
- Adam L. "Duncan" Beberg
White House Moves to Contain Political Damage From Enron Turmoil
By JACK LYNCH
he White House disclosed today that Kenneth L. Lay, chief executive of the
Enron Corporation and a leading financial supporter of the Bush presidential
campaign, had contacted two Cabinet members a few weeks before the giant
energy company's collapse to warn of its growing difficulties.
The disclosure followed the Justice Department's decision late Wednesday to
form a special task force of prosecutors from across the country to conduct
the inquiry into the company's downfall.
Today President Bush directed the Treasury Department and other agencies
today to examine how to protect pension plans from debacles similar to
Enron's collapse. But that move appeared aimed in part at containing the
political damage from Enron's demise.
Attorney General John Ashcroft, another beneficiary of Enron's campaign
contributions when he was senator, said today that he would not take part in
the Justice Department's investigation of Enron.
And adding to the day's turmoil, Arthur Andersen L.L.P., which audited
Enron's financial statements, disclosed this afternoon that it had destroyed
"a significant but undetermined number of electronic and paper documents"
related to the company.
Enron's collapse, which came on Dec. 2 in the largest bankruptcy filing
ever, virtually wiped out the stakes of its shareholders and eliminated
millions of dollars in investments held in the pension plans of the
Ari Fleischer, the White House spokesman, said today that Mr. Lay called
Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans in October
to advise them of Enron's deterioration and suggested that government
intervention might be needed to protect the company's bondholders. Mr.
Fleischer said that Mr. Lay told Mr. O'Neill that his company was heading
into bankruptcy and that he told Mr. Evans that Enron might default on its
Mr. Fleischer said Mr. O'Neill and Mr. Evans decided not to intervene, and
they did not discuss the calls with Mr. Bush.
Mr. Bush said that Mr. Lay did not contact him to discuss the company's
financial crisis and that he had not seen the Enron executive since last
The president said Enron's collapse raised considerable questions about the
rules for pension plans and corporate disclosure.
"One of the things that we're deeply concerned about is that there has been
a wave of bankruptcies that have caused many workers to lose their
pensions," he said.
The president said he directed the Treasury Department, along with the
Commerce and Labor departments, to examine the rules for pension plans and
401(k) plans and propose revisions to protect employees from losing their
savings in a corporate bankruptcy.
In addition, Mr. Bush said he had directed Treasury Secretary O'Neill and
other government officials to form a working group to examine the rules on
corporate disclosure. The group would include officials from the Securities
and Exchange Commission, the Federal Reserve and the Commodities Futures
Meanwhile, Mr. Ashcroft removed himself from the Justice Department
investigation of Enron because of his relationship with the company. Enron
contributed to Mr. Ashcroft's failed Senate reelection campaign in Missouri
"The attorney general has not been involved in any aspect of initiating or
conducting any investigation of Enron," the Justice Department said in a
David Ayres, Mr. Ashcroft's chief of staff, also recused himself.
The department said Larry D. Thompson, the deputy attorney general, would be
responsible for the investigation.
The Justice Department, as well as the Securities and Exchange Commission,
also learned today that Arthur Andersen, the Enron auditor, had destroyed
documents related to the company. The accounting firm said it was also
notifying Congressional committees and other agencies investigating the
Enron collapse that the documents were missing.
"In recent months, individuals in the firm involved with the Enron
engagement disposed of a significant but undetermined number of electronic
and paper documents and correspondence relating to the Enron engagement,"
the firm said in a statment.
The circumstances surrounding the document were not immediately clear.
Andersen said its company policy "required in certain circumstances the
destruction of certain types of documents."
But Andersen said millions of documents related to Enron still exist, and it
has retrieved some of the deleted electronic files. Andersen said it is
continuing retrieval efforts through electronic backup files "and is
continuing in its efforts to fully learn and understand all the facts
related to this issue."
Questions about Enron, and this morning's disclosure that its chief
executive had reached out to two Cabinet secretaries, dominated the midday
news briefing by Mr. Fleischer.
"It's appropriate to take a look at what led to the bankruptcy of Enron,"
Mr. Fleischer said. He expressed the hope that any Congressional inquiry
would be even-handled, not a "partisan, politically charged investigation"
of the kind that he said had so soured many Americans on Washington.
Mr. Fleischer rejected any suggestion that the Treasury or Commerce
secretaries should have informed the president of their conversations with
Mr. Lay or told the Securities and Exchange Commission what they knew of
Enron's weakness. He also rejected any suggestion that there was any attempt
to keep Mr. Bush "out of the loop" on Enron matters.
The spokesman said there should be no rush to judgment about Mr. Lay's
contacts with Mr. O'Neill and Mr. Evans "as if there's something wrong
inherently with contact and communication and there is not."
Some Democratic staff members on Capitol Hill could barely contain their
glee today. "This is the perfect storm," said Lou Schilero, the press
secretary for Representative Henry A. Waxman of California. "It's the
biggest bankruptcy in American corporate history a bankruptcy where a small
number of executives enriched themselves to the tune of hundreds of millions
of dollars while thousands of employees were left with worthless stock. And
in 2001, Enron is the most influential company in Washington. When you piece
it all together, there are many questions that need to be answered."
The White House decision to review the rules on pension plans and corporate
disclosure came a day after the Justice Department widened the potential
scope of the criminal investigation into Enron.
The broadened inquiry, however, is likely to reduce the burdens going
forward on Enron, which has been struggling with the demands from multiple
civil and criminal investigations. By consolidating the criminal
investigations, the company will have only one coordinated group of
prosecutors seeking information, decreasing the potential demands for
documents and limiting the number of officials to persuade of its position.
Shares of Enron fell 12 cents, or 15.1 percent, to close at 67 cents today
on the New York Stock Exchange. The bankrupt company's stock trades at just
a fraction of its all-time high of $90.75, reached on Aug. 23, 2000.