- WASHINGTON (UPI) - A Senate
panel probing energy conglomerate Enron Corp.'s sudden collapse sent a
subpoena Friday to Texas Republican Sen. Phil Gramm's wife, Wendy Gramm,
panel sources confirmed, while a new contact with a Bush administration
official -- by a prominent Democrat -- was disclosed by the Treasury Department.
Wendy Gramm has been a member of Enron's board of directors for eight years
and of the crucial Audit and Compliance Committee as the giant company's
financial condition was deteriorating.
Her subpoena is among 51 issued by the Senate Permanent Subcommittee on
Investigations chaired by Sen. Carl Levin, D-Mich., seeking documents from
Enron, the Arthur Andersen LLP accounting firm, and current and former
officers, employees and board members of Enron.
Of the 51 subpoenas, 49 went to individuals, one to Enron Corp. and one
to the Andersen firm seeking documents as far back as January 1999.
Phil Gramm is the second-largest recipient in the Senate of financial contributions
from Enron, receiving $97,350 from the company between 1989 and 2001, according
to data provided by The Center for Responsive Politics. The senator receiving
the largest contribution from Enron is Sen. Kay Bailey Hutchinson, R-Texas,
who received $99,500.
The subpoenas came as government and congressional scrutiny of the collapse
intensified.
Friday evening, the Treasury Department disclosed that Clinton administration
Treasury Secretary Robert Rubin contacted a department under secretary
in early November to suggest he call ratings agencies who were poised to
downgrade Enron's credit rating.
A Treasury spokesperson said Rubin, now chairman of the executive committee
of a banking conglomerate with hundreds of millions of dollars of exposure
to the Enron collapse, Citigroup, called Under Secretary for Domestic Finance
Peter Fisher to ask what he thought of Fisher contacting the ratings agencies
to encourage them to "worth with" Citibank and other Enron banks.
The spokesperson said Fisher responded negatively, saying he did not think
such a call was appropriate and Rubin responded that he thought that was
a reasonable position. "Fisher made no such call," the Treasury
spokesperson said.
It was Fisher to whom Enron President Lawrence Whalley made six to eight
calls in late October and early November, calls a Treasury spokesperson
earlier Friday said Fisher took to be suggestions he call Enron's banks.
Then too, the department maintains, Fisher decided not to do anything.
Over Thursday and Friday, it was disclosed that Enron's chairman, Kenneth
Lay, contacted top Bush Treasury Secretary Paul O'Neill, Commerce Secretary
Don Evans and Alan Greenspan, chairman of the Federal Reserve, in October
about Enron's financial difficulties.
Secretary of Commerce Evans said Lay sought assistance from the federal
government, but Lay said in a statement late Thursday that he only sought
to alert top financial leaders that his mammoth firm was having difficulties.
O'Neill said he agreed with Evans that nothing was to be done.
President Bush, who has received political and financial support from Enron
and Lay in all his political races, said the Enron chief did not contact
him.
Several prominent Democrats have attempted to use the various Enron entreaties
as evidence of a close association with the Bush administration but no
one has accused White House officials of wrongdoing.
When Enron received no outside financial assistance and as the ratings
agencies ultimately downgraded its credit standing, the company reported
to stockholders that it had $500 million of previously unreported debt.
The subsequent selloff of Enron stock was swift and dramatic -- and left
many of the company's 21,000 employees with life savings that diminished
to near nothing as the stock fell below a dollar a share.
As several employees later told a congressional hearing, they were prohibited
from selling their Enron stock from their 401K retirement plans even though
top executives sold $1 billion in shares while they still retained their
value.
The company sought protection under Chapter 11 of the U.S. Bankruptcy Code
on Dec. 2.
Arthur Andersen, the company's auditing firm, reported in testimony in
December that it told Enron officials that some of their financial transactions
might be illegal. Joseph Berardino, Andersen chairman, also testified that
Enron withheld financial information from Andersen. He admitted that his
firm's accountants may also have made some mistakes.
Then Thursday, Andersen disclosed that a "significant" number
of correspondence, electronic files and other data may have been destroyed,
some of it after investigations had begun.
Well before the Enron debacle began gathering steam, on Sept. 5, Sen. Gramm
announced that he would not seek re-election after serving 18 years in
the Senate. During his retirement announcement, Gramm said that he had
achieved his goals as a senator and would move on to another career.
Gramm's spokesman, Larry Neal, declined comment on the subpoenas, but said
Enron had nothing to do with Gramm's decision not to seek another term.
"He outlined in detail in his retirement announcement his reasons
for leaving, and those were his only reasons," Neal said.
The House Energy and Commerce Committee, run by Republican Rep. Billy Tauzin,
R-La., also wants to talk to Wendy Gramm. Tauzin requested the interview
with Wendy Gramm by name in a Dec. 10 letter to Enron.
The spectacular financial collapse of Houston-based Enron has drawn broad
scrutiny from a host of federal agencies and congressional committees.
On Wednesday, it was revealed that the Justice Department had opened a
criminal investigation into the Enron matter.
On Thursday both U.S. Attorney General John Ashcroft in Washington and
U.S. Attorney Michael T. Shelby in Houston recused themselves from the
investigation. Selby's office announced that he and several other attorneys
had relatives who were employed by Enron.
Ashcroft received a $25,000 contribution from Enron during his run for
re-election to the Senate from Missouri and in an unsuccessful attempt
to win the Republican presidential nomination.
The Securities and Exchange Commission also has opened a probe into whether
Enron officers were capitalizing on their knowledge of the firm's financial
condition when they sold millions of dollars in stock prior to its nosedive.
The agency also wants to determine whether Enron financial claims to investors
were misleading and whether Arthur Andersen's audit of those statements
was proper.
The House Energy and Commerce Committee led by Tauzin and Ranking Minority
Member John Dingell, D-Mich., Friday announced that it was demanding a
host of financial records -- including some that Arthur Anderson says were
destroyed -- as well as interviews with Enron's financial oversight officials.
That request covers 43 areas of Enron's finances and corporate behavior
including all earnings-related documents and memos, details about the finances
and discussions related to several outside investment vehicles operated
outside the company's normal procedures.
In the Senate, a Commerce Committee subcommittee -- led by North Dakota
Democrat Byron Dorgan -- already has held a hearing on the loss of pension
funds when the stock price collapsed. At that hearing, a top Arthur Andersen
official said he thought there was a possibility that criminal acts had
been committed by the company.
Dorgan plans more hearings into the loss of the retirement funds but so
far has been unsuccessful in getting Lay to appear before the committee.
The Senate Government Affairs Committee also announced an investigation
on Jan. 2 into the collapse, choosing to focus on whether government agencies
failed to detect, or ignored, signs of the impending collapse. The committee
plans a hearing on Jan. 24, according to Chairman Joe Lieberman, D-Conn.
The House Government Reform Committee has been slower to formally step
into the fray, but its ranking member, California Democrat Henry Waxman,
has been vocal about the possibility that Enron used undue influence on
administration officials to avoid additional scrutiny of its finances and
practices before the collapse. Waxman also has been engaged in a fight
with the Bush administration over releasing details of meetings between
Enron officials and high-ranking Bush administration officials, when the
White House was preparing a national energy policy.
On Jan. 3 the vice president's office provided Waxman with a list of contacts
between the vice president or his staff and Enron officials. The letter,
from David S. Addington, the vice president's counsel, said that neither
the vice president nor his staff had ever discussed Enron's financial status
with the company's representatives.
(Mark Benjamin is UPI's chief congressional correspondent, and Nicholas
M. Horrock is UPI's chief White House correspondent.)
Copyright © 2002 United Press International. All rights reserved.
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