WASHINGTON, Jan. 29 (UPI) -- Rep. James Greenwood, R-Pa., said his first emotion was anger when he heard Houston-based Enron Corp. had filed the largest bankruptcy action in history, leaving thousands of employees out of work and with virtually worthless retirement and pension accounts.
Greenwood, chairman of the House Energy and Commerce Committee's Oversight and Investigations subcommittee, immediately launched hearings into the failure of the energy trading company and its accounting firm, Arthur Andersen.
Enron's former top officials, including Kenneth Lay, its chief executive officer, made hundreds of millions by selling Enron stock while employees were locked into ownership of their plummeting shares, according to the lawsuit filed by more than 400 current and former Enron employees.
In an interview with United Press International, Greenwood said the hearings are meant to discover to what extent insider deals and the complicity of the accounting firm were in fact legal, and to pass "good solid legislation" that clarifies the financial stakes involved in such investments. So far, Greenwood said, he has received no clear answers from either Enron officials or executives at Arthur Andersen.
In Washington, the collapse of Enron sent chills through Congress as lawmakers explained the large contributions the company made to their individual election campaigns over the years. Greenwood received $1,000 from Ken Lay in 1998, his office said. According to the Center for Responsive Politics, Greenwood received another $1,300 from Arthur Andersen between 1997 and 2000.
The Republican Main Street Partnership, a coalition of GOP moderates of which Greenwood is a member, defended the congressman. The group said Greenwood has promised to return the campaign contribution he received from Enron to the company's employees fund.
Greenwood talked with UPI Washington Reporter Kathy Gambrell.
Q. Can you talk about your reaction to the news that Enron had collapsed and that so many workers and investors had lost their life savings while the top executives had sold their stock early and made millions of dollars?
A. I have a younger brother who got caught up in the economic slowdown and lost his job. I saw what happened to him a very short period of time. He had to sell his house and downsize. It was his dream home and he had to sell it and struggle mightily to find another way to provide for his family. I've been through that with him, so I've had first-hand experience of what agony that can be. Then I searched in my mind about multiplying it by the thousands of Enron employees and realizing that their suffering resulted from the greed and recklessness of a handful. It made me pretty angry.
Q. What are you hoping to uncover by holding these hearings?
A. There is a lot of who-done-it in this. And we'll get into all of that, but the real task is to find out to what extent these insider deals and the complicity of the accounting firm were in fact legal, and going from there to passing good solid legislation that makes it explicitly clear that every penny of risk and obligation on the part of a publicly traded company shows up on its financial statements, and that it's a crime for a company to withhold that information from its accountant, and it's a crime for the accountant to withhold it from the financial statement -- so that this never happens again.
Q. How long do you think it will take to uncover what actions Enron and Arthur Andersen officials actually took once the knew what trouble the company was in?
A. I think it will take several months until we feel that we have most of the details fleshed out here.
Q. What is your opinion of the Arthur Andersen auditor (David Duncan) who took the Fifth Amendment when asked about his dealings with Enron?
A. I was very disappointed because he, in fact, had cooperated with us initially and spent four-and-a-half hours with my staff telling his story. Obviously, on advice of counsel, he chose not to testify under oath. We're trying to figure out whether Mr. Duncan is the bad guy, or the fall guy, or both. So far Andersen has failed to demonstrate that he acted alone.
In its press release on Jan. 15, Mr. (Joseph F.) Berardino stated that Andersen had "learned" that Mr. Duncan had set in motion this initiation to rush to destroy documents. When I pressed Andersen officials on how they learned that, they had no answers. I asked him if Mr. Duncan has admitted that he'd done that; the answer was no.
I asked if they could share with us the names of Enron employees who had come forward and said, "I destroyed documents contrary to our policy because Mr. Duncan ordered me to." So we don't have a clear picture of how these scores of Andersen employees destroyed documents, why they destroyed documents contrary to company policy, and on whose orders. And we still have this nagging issue of how could the top brass at Andersen, knowing that its biggest client was melting down, not have early on in September and October, not dealt straightforwardly with the document issue.
Q. Democratic Rep. Henry A. Waxman's report on the White House and its energy plan in relation to Enron stated in part that, "The analysis in this report reveals that numerous policies in the White House energy plan are virtually identical to the positions Enron advocated. In total, there are at least 17 policies in the White House energy plan that were advocated by Enron or that benefited Enron financially." If it is, in fact, proven that the White House did approve policies in its comprehensive national energy strategy that would have benefited Enron -- a major campaign contributor -- would the current investigation extend past the company to the activities of White House? Or is it premature to think about that right now?
A. First off, the financial collapse of Enron and the accounting activities that covered it up really have nothing to do with this entirely secondary issue, which is the impact of Enron on the president's energy policy. For me to begin to become exercised about Enron's impact on the administration's energy policy, I would have to believe the administration advanced policies that it wouldn't ordinarily be predisposed to.
In other words, if you look at George Bush's enunciated position in his campaign with regard to energy, his background as an oil man, if you look at his ideas as governor of Texas, and ditto for Cheney and others in the administration, and say, "They never had ideas like this. How did they suddenly go veering off in this new direction? Simply because Enron wanted them to. And on top of that, these polices are bad for the country" -- then you might say Enron somehow used its financial influence to impact on policy.
My pre-supposition -- unless somebody can present evidence to the contrary -- is that policies that Enron was advocating were probably fairly co-linear with what the Bush administration was advocating anyway.
Q. Will the controversy over Enron and its contributions to politicians in Washington push the issue of campaign finance reform towards passage?
A. I hope so. I am a co-sponsor of Shays-Meehan and I signed the discharge petition early on. I advocate the elimination of soft money. I even advocate the elimination of political action committees. I don't accept funds from political action committees. So I hope this is another factor that might wake the public up to the importance of campaign finance (reform) to the extent that they actually press their representatives in Congress to get it done.
Q. While this entire situation has not been clarified or resolved yet, do you think the possibility exists for criminal indictments or even jail time for either Enron or Arthur Andersen officials?
A. I am not there yet. And frankly, I am not an attorney. I think those are decisions that will be made by the Justice Department. I certainly haven't been at the point where we've in the course of our interviews and documents discovered (something) so obviously criminal that we've been compelled to call the Justice Department.
Q. President Bush has talked about reforming Social Security, allowing Americans to put a part of their retirement funds into investment accounts. What effect do you think Enron's situation will have on that plan? Do you still think Enron's demise is an aberration and that such a plan is still a good idea?
A. I think one of the urgent reasons we need to reform the system (is) to make certain that all the risk involved in purchasing stock is made clear in the financial reports, and not hidden in the shell game that Enron used, is because we need to reform the Social Security so that it can incorporate (investments) into its personal retirement accounts. Enron gives a black eye to investment in general and certainly makes those who might be sitting on the fence with regard to Social Security reform more nervous than ever.
Q. If you could have a conversation with former Enron CEO Kenneth Lay, what would you say?
A. The question I would ask is, "How do you sleep at night?" It's hard to imagine that he could be building his own personal fortune without realizing the extent he was putting own employees, who were earning that money for him, at such dire risk.
