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Wednesday, 21 August, 2002, 12:43 GMT 13:43 UK
Enron: Crime, punishment and reform
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Enron's collapse - and its auditors' apparent failure to question the company's unorthodox business practices - has prompted a wave of investigations.
BBC News Online flags up the penalties and reforms which could emerge from these inquiries. The implications of the energy giant's collapse seem to grow daily. And thousands of aggrieved employees, investors and creditors are waiting to find out what punishment will be meted out to those who covered up Enron's true financial position so successfully for so long.
Charged with "protecting investors and maintaining the integrity of the markets", the SEC could issue fines or order the establishment of a fund to reimburse shareholders. Then the DoJ - which has criminal authority - could prosecute individuals suspected of fraud or insider trading. But the wider battle to right Enron's wrongs will focus on pushing through regulatory reforms designed to prevent a recurrence of corporate scandals on this scale. If successfully introduced, these reforms could significantly change the US corporate and political landscape. Reforming ambition The issues earmarked for attention by reformers include:
Hidden info
There are numberous obstacles in the path of investigators trying to shed light on the affair. Firstly, many key documents have already been shredded by both Enron and its auditor, the accountancy firm Andersen. Secondly, Congressional investigators do not have the power to force anyone to testify.
This right has already been exercised by Enron's former chief financial officer Andrew Fastow, and David Duncan, the man at accounting firm Andersen in charge of auditing Enron's books. Former chief executive and chairman Kenneth Lay has also refused to appear on the grounds that he would not be guaranteed a fair hearing. And the US administration, while pledging to get to the bottom of the crisis, has also proved to be uncooperative in certain areas.
The GAO is demanding details of the talks in order to gauge the influence Enron exercised on US energy policy. The refusal to release these documents has led congressional investigators to take the unprecedented step of suing the White House. Long and drawn-out With the Enron collapse sending ripples into a wide range of markets and industries - pensions, campaign finance, stock markets, and energy have all been affected - there are now almost a dozen bodies trying to work out what actually happened. The following bodies and agencies are involved:
Taking a stance Some political observers say the Enron affair may also inspire a change of direction by President George W. Bush. Mr Bush has been seen as an enthusiastic supporter of corporate America since coming to power. One of his key strategies for stimulating the beleaguered economy, for example, is to offer tax-breaks to businesses.
His energy policies in particular have been seen as favouring oil firms' interests over those of the environmental lobby. Mr Bush has been quick to play down his links - both personal and political - with Enron. Recent speeches have been peppered with references to his determination to crackdown on corporate fraud and restore the trust of investors. And he has pushed through a sweeping corporate reform bill, which aims to increase supervision and punish wayward companies. |
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