BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Monday, 14 January, 2002, 14:48 GMT
Enron's fall shows 'genius of capitalism'
US treasury secretary Paul O'Neill has described the collapse of energy giant Enron as a result of 'the genius of capitalism'.

"People get to make good decisions or bad decisions, and they get to pay the consequences or to enjoy the fruits of their decisions. That's the way the system works," Mr O'Neill said on television.

Enron inquiries
House Financial Services Committee - role of auditor Andersen
House Commerce Cttee - regulation of companies and Enron
House Education and Workforce Cttee - regulation of employee stock ownership
Senate Commerce Cttee - retirement funds
Senate Governmental Affairs Cttee - regulatory failures, Enron's lobby efforts
Securities and Exchange Commission - Enron accounting, Andersen audit
Justice Department - possible criminal activity
Labor Department - Enron's employee retirement plan
Trading in Enron shares was suspended on Monday for the second day running. The company is expected to announce shortly details of the sale of its core trading operations to Swiss banking giant UBS.

Meanwhile, the auditor of Enron's accounts, Andersen, has come in for more scrutiny. US media are reporting that an Andersen executive deliberately ordered the destruction of documents and e-mails to avoid blame if the company were to collapse.

Some analysts are now wondering whether Andersen can survive its latest trouble.

The accounting firm has come in for criticism of its auditing procedures before. Andersen recently made a record payout of $7m to settle charges by the Securities and Exchange Commission over misleading audits of the US firm Waste Management.

'Companies come and go'

Mr O'Neill insisted that it was not his role to sort out individual companies' difficulties.

Instead, he would be rather more concerned with whether or not Enron's problems could hurt US and global capital markets, he said.

"There are very few companies that have been around for 40 or 50 years"

"Companies come and go. It's part of the genius of capitalism."

No assistance

Mr O'Neill also said that he never had plans to bail out the bankrupt energy trading company, despite apparent, though indirect, pleas for help from chief executive Kenneth Lay.

Companies come and go. It's... part of the genius of capitalism

Paul O'Neill
US Treasury Secretary
During the autumn, Mr Lay apparently called both Mr O'Neill and Commerce Secretary Don Evans, hinting that they ought to encourage the banks to extend their credit to Enron.

But both officials turned him down, and neither of them told President George W Bush about the calls.

"I didn't think this was worthy of me running across the street [to the White House] and telling the president," Mr O'Neill said.

Angry response

The government's reluctance to step in to prevent the energy trading giant's spectacular collapse is likely to be met with anger and disappointment from investors who have lost their money and by Enron staff who have lost their jobs.

Senator Joseph Lieberman, who is in charge of an investigation into the Enron affair, described Mr O'Neill's views as "cold-blooded".

His views were reflective of "the eighteenth century, but not the twenty-first century", Mr Lieberman said.

A year ago, the now defunct group was valued at about $40bn (27.72bn) by the stock market.

The company is now facing a criminal investigation.

The Justice Department will look into its financial dealings, including claims that it defrauded investors.

Large payments

During the 1990s, Enron and its workers contributed almost $6m to political campaigns in the US.

Almost $4.5m went to Republican candidates, of which around half went towards President Bush's 2000 election campaign.

The decision to turn down Enron's call for help may have been affected by the group's political donations, said Mr Lieberman.

Senator John McCain, a Republican, told US media that "we're all tainted by the millions and millions of dollars that were contributed by Enron executives".

The donations could have created "the appearance of impropriety", he said.

Mr Lieberman, who himself received $1,000 from Enron in his 1994 Senate campaign, said his investigation would seek to ascertain "whether any of the influence" from Enron donations affected politicians' handling of the company's demise.

The BBC's Rob Watson
"Former employees have nothing but contempt for Enron"
See also:

12 Jan 02 | Business
Enron chief asked Treasury for help
10 Jan 02 | Americas
White House plays down Enron links
10 Jan 02 | Business
Enron documents 'disposed of'
10 Jan 02 | Business
Enron collapse prompts inquiry
12 Dec 01 | Business
Enron to start $6bn sell-off
14 Jan 02 | Business
Andersen attacked for Enron role
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories