Enron's Lay to seek 5th's protection
WASHINGTON, Feb. 11 (UPI) -- Former Enron Corp. Chairman Kenneth Lay will seek the constitutional protection against self-incrimination during testimony this week before a Senate committee.
Lay, who headed Enron when it declared the biggest bankruptcy in U.S. business history, was subpoenaed to appear Tuesday before the Senate Commerce, Science and Transportation Committee. He had declined previous requests for his testimony but the committee issued the order for his appearance last Tuesday.
On Sunday his spokeswoman, Kelly Kimberley, said, "Under instruction of counsel, he has decided to plead the Fifth Tuesday." The Fifth Amendment allows people to refuse to testify against themselves.
Several former Enron executives appeared before the committee last week and most claimed Fifth Amendment protection. One who didn't was former Enron Chief Executive Officer Jeffrey Skilling. That decision could be costly since Sunday two U.S. representatives said Skilling's assertion that he was unaware of partnerships run by Enron's chief financial officer that were used to provide an inaccurate view of the company's profits. Some have said those comments could be considered perjury.
On CBS' "Face the Nation," Rep. Billy Tauzin, R-La., said: "All the information we got was that he really thought he was smarter than everybody in Washington that he could come and just ... tell us anything he wanted and we would buy it. I'm afraid he may have put himself in some legal jeopardy as a result."
Skilling unexpectedly resigned as Enron's chief executive in August after pocketing an estimated $67 million from selling company stock.
"I didn't believe the company was in any imminent financial peril," Skilling said in last week's testimony.
"We believed fiercely in what we were doing. I am devastated by and apologetic about what Enron has come to represent."
A key focus of the hearings was why Skilling did not take action after Jeffrey McMahon, then Enron's treasurer, approached him in March 2000 with concerns about the company's dealings with the complex, off-the-books LJM partnerships.
"It was my understanding that the purpose of the transactions was to provide a real hedge," Skilling said of the partnership deals used to lock in profits from technology investments.
"I was not aware of any financing arrangements designed to conceal liabilities or inflate profitability," he said.
In earlier testimony Thursday, McMahon -- now Enron's president and chief operating officer -- told the congressional panel he had met with Skilling nearly two years ago to report the situation with a series of complex partnerships that eventually led to Enron's downfall was a becoming a problem.
Last week's appearances marked the first time since Enron's collapse that past and current company executives presented themselves to a congressional panel. While many of those called arrived in answer to a subpoena, Skilling's testimony was voluntary.
More than 10 congressional investigations and inquiries are under way by the Securities and Exchange Commission and the Labor Department. The Justice Department has opened a criminal investigation.
Enron filed for Chapter 11 protection Dec. 2 in the nation's largest bankruptcy, putting more than 4,000 of its employees out on the street. The workers lost thousands of dollars of savings in the company's 401(k) retirement plan.
Argentina peso plummets
BUENOS AIRES, Argentina, Feb. 11 (UPI) -- Argentina's peso fell as much as 17 percent Monday and was heading further downward in its first day of free floating after an end to its 11-year, one-to-one peg with the U.S. dollar and a temporary dual-exchange system.
A spokesman for Argentine President Eduardo Duhalde made pleas for calm in the country as citizens -- ever apt to take to the streets in protests, which sent four presidents before Duhalde packing in a month's time -- watched the value of their pesos shrivel to as low as 2.5 to the dollar.
"After some weeks (the peso) will be at a reasonable level," the spokesman, Eduardo Amadeo, said after admitting that the peso is in for a turbulent ride on the free market. "This isn't a question of one day, but of some months."
The move to freely float the peso was strongly urged by the International Monetary Fund, which Argentine leaders are hoping will resume making aid payments or even agree to more aid packages as the country struggles to end a four-year recession.
Duhalde and his economic team are betting that a weakened peso will light a fire under the country's production sector and make Argentine exports more attractive, much like what occurred in Brazil after that country devalued in 1999 and saw its exports make headway in Latin America and elsewhere.
But, as Duhalde explicitly pointed out over the weekend, Amadeo underscored that the country's Central Bank will aggressively use its $13.9 billion in international reserves to intervene in the market and prop up the peso, which analysts saw dropping to three to the dollar if bank intervention isn't seen. He declined to detail to what extent the bank will intervene, noting that "this is a secret best guarded."
Meanwhile, Amadeo also defended the government's decision to convert the debts of large companies to pesos at the one-to-one peg with the dollar, saying that if this weren't done, there would be "thousands more unemployed today" as companies would be crushed under the weight of what they owe.
When pressed as to why the country didn't dollarize, as various members of Duhalde's own Peronist Party have advocated, Amadeo struck the populist stance of that his boss has been known to harbor.
"When I hear talk of dollarization, I advise that you look into the face of the person that talks about it, and you are going to see that it is the same person who requests that we drain social spending and who considers the economy to be more important than society," Amadeo said.
Many companies with a presence in Argentina -- from breweries to automobile makers -- report they are prepared to hike prices as early as Tuesday if the value of the peso plummets. Ordinary Argentines, ever mindful of the 5,000 percent inflation of the late 1980s, have been trying to get their hands on dollars by any means possible, leading to long lines outside exchange houses.
But small business leaders in Buenos Aires made patriotic calls for their fellow businessmen to not mark up prices of everyday goods, and made vows not to stock any product of a company that increases its prices.
Opposition to the country's economic direction, namely the floating of the peso, was registered by Rodolfo Daer, a moderate leader within the powerful General Confederation of Labor Union, who told a local radio station that "the devaluation ... is pulverizing the salaries" of workers.
"The reactivation of productivity is fundamentally based on the internal market. If the internal market is strangled, if it loses the power to acquire, we won't have a recovery of employment nor productivity," Daer said.
Unemployment levels in the country are hovering around 20 percent.
Markets across Latin American dropped at midday as fears spread that Duhalde's hold on power in Argentina could end if the peso's drop sends protesters into the streets. In Brazil, the Bovespa index was at 12,598, down 0.68 percent, while Argentina's MerVal fell 6.3 percent.
In Chile, the IPSA was down 0.23 percent at 95.28 and Mexico's IPC index -- relatively untouched by what happens in Argentina -- was down about 1 percent.