Enron inquiry kicks off

Anti-Enron feeling is running high

Congress has begun a week full of hearings into the collapse of energy giant Enron, aiming to discover how to protect against similar disasters.

But the key witness, Enron's former chief executive and chairman Kenneth Lay, refused to be cross-examined at the last moment.

Judgements have been reached and the tenor of the hearing will be prosecutorial

Earl Silbert, lawyer of ex-Enron boss Kenneth Lay

One key hearing - the Senate Commerce Committee - has already been cancelled because of the absence of Mr Lay.

But the House Financial Services inquiry decided to press ahead regardless, with the hearing kicking off at 1400 GMT.

Mr Lay's testimony was expected to be the highlight of a week busy with inquiries into what went wrong at Enron and why it was not spotted earlier.

Pre-judged

The Commerce Committee cancelled its crucial hearing shortly after Mr Lay's lawyer said his client would not be appearing due to the "prosecutorial" climate surrounding the congressional enquiries.

Several senate hearings have already been sidestepped after key officials either refused to turn up or stayed silent in order to avoid incriminating themselves.

Mr Lay's lawyer, Earl Silbert, said comments by congressmen suggested investigators may have already made up their minds about his client's role in the company's demise.

This week's Congressional hearings

Monday: Senate Commerce - cancelled
House Financial Services

Tuesday: Senate Governmental Affairs, House Financial Services

Wednesday: Education and the Workforce, Energy and Commerce

Thursday: Labor and Pensions, Energy and Commerce, Education and the Workforce

"He was looking forward to a meaningful, reasoned question and answer session to provide his understanding of the events and to discuss a number of related policy, legal and regulatory issues," said Mr Silbert, adding that the downfall of the company had been devastating for his client.

The letter was sent following the comments made by several congressmen on US television ahead of the hearing.

Billy Tauzin, chairman of the Commerce Committee, indicated that those responsible for the Enron collapse deserve prison sentences, while Senator Byron Dorgan commented on a "culture of corruption."

"Ken Lay obviously had to know that this was a giant pyramid scheme - a giant shell game ...there was blatantly fraudulent activity going on for years, and in my opinion he had to know," Senator Peter Fitzgerald told NBC news.

Mr Lay's lawyer concluded his letter by saying that his client could not be expected to participate in proceedings where conclusions have been reached before Mr Lay had spoken.

"These inflammatory statements show that judgements have been reached and the tenor of the hearing will be prosecutorial," said Mr Silbert.

Forced appearance?

The letter claims that Mr Lay had spent long periods preparing for his testimony.

Billy Tauzin: Somebody should go to prison

Mr Lay had earlier cited his involvement in the time-consuming investigations as the reason for his resignation from Enron on 23 January.

At the weekend, a 217-page report from a panel of Enron directors claimed that some of the company's top executives took millions of dollars "they should never have received".

The document also revealed that Mr Lay personally approved the partnership arrangements that led to key accounts being kept off the balance sheet, though he is not accused of making any personal financial gain.

The Senate has now said that it will subpoena Mr Lay in order to force him to appear.

But the Senate and Congress committees cannot force him to give evidence, and it will be Mr Lay's right to stay silent in order to avoid incriminating himself.

Enron's former chief financial officer Andrew Fastow and former chief executive Jeffrey Skilling are still scheduled to appear before the Energy and Commerce Committee on Thursday, although many observers expect them to remain silent.

Enron's collapse is being scrutinised by about a dozen Congressional committees, and is also the subject of a criminal investigation by the US Department of Justice.