- WASHINGTON (Reuters) - The
Justice Department said on Wednesday it had opened a criminal investigation
of Enron Corp., as the controversy over the energy giant's collapse
- Officials declined to say exactly when the criminal probe
began. But they said it was centered in the department's criminal division
and that a task force was being set up to handle the case.
- Robert Bennett, attorney for Enron, said, "When
this investigation is finished, a lot of the things that people are reading
and hearing will be proven to be not true."
- He said he was pleased the Justice Department was
its inquiry. "It is very difficult to deal with multiple entities
... We have been in contact with several different prosecutors,"
- Once the world's largest energy trader, Enron slid in
mere weeks last year from Wall Street stardom to making the largest
filing in U.S. history on Dec. 2. Its downfall, after withdrawal of a
takeover bid by rival Dynegy Inc., threw thousands out of work and
- The episode sapped the life savings of many Enron
whose 401(k) retirement plans depended on the company's stock, while top
executives allegedly pocketed fat profits by selling ahead of a dizzying
plunge in the share price.
- The White House on Wednesday said it was likely to soon
propose new policies to guard against a repeat of the Enron debacle. White
House spokesman Ari Fleischer, asked about the Justice Department probe,
told Reuters it was important to get to the bottom of the Enron collapse
and develop new policies to protect workers and pensioners.
- "It's important for the investigation to proceed
to determine what was done and why it was done. The president also believes
it's important to explore new policies so it (a similar collapse) can never
happen again," Fleischer said.
- Asked whether new policies would be announced soon, he
- ENRON FACES MULTIPLE PROBES
- The Houston, Texas-based company, once ranked No. 7 on
the Fortune 500 list of large corporations, is also being probed by five
congressional committees, the market-regulating Securities and Exchange
Commission and the Labor Department.
- At the heart of Enron's problems were complex financial
partnerships -- known as special-purpose entities -- set up by Enron
and used to keep debt off the company's highly leveraged books. After some
deals involving the partnerships went sour, Enron in October had to take
a $1 billion charge against earnings and cut shareholder equity by $1.2
- Those moves drew market attention to the partnerships,
triggering a crisis in investor confidence and credit-rating downgrades
that ultimately led to bankruptcy court.
- The SEC said its 10-week-old probe of Enron and its
auditor, the accounting firm Andersen, would not be altered by the Justice
Department's action. "The Justice Department and the SEC frequently
run concurrent investigations," said SEC spokeswoman Christi
- The decision at Justice to move to a full-fledged
investigation came after weeks of examining whether such a probe was
- They were unable to say whether any charges would ever
result from the investigation.
- "I'm not assuming they will file charges,"
Bennett said. "This is a very preliminary investigation ... To my
knowledge there's no evidence of wrongdoing yet. You have a business
and you have a lot of allegations. But allegations are not the same as
- The departmental task force on the case is expected to
include federal prosecutors from Houston, New York and San Francisco. Also
on the task force will be members of the Justice Department's fraud
- Enron was a major contributor to the election campaign
of President Bush, as well as many other lawmakers in Washington. The once
politically powerful company also advised the Bush administration on energy
- The head of Congress' investigative arm said on Wednesday
he would decide within a month whether to sue the White House over its
refusal to name industry executives the administration met with last year
while drafting its new energy policy.
- Shares in Enron closed on Wednesday at 79 cents on the
New York Stock Exchange, off an August 2000 high of $90.56.