BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in:  Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Wednesday, 6 February, 2002, 00:31 GMT
Enron ex-boss 'to attend hearings'
Anti-Enron protestor
Anti-Enron feeling is running high
Lawyers for former Enron chief Kenneth Lay have said he will appear before a Congressional panel investigating the collapse of the energy trading giant next week.

"We've had assurances from his attorney that he will appear," said Congressman Michael Oxley, an Ohio Republican who chairs the House Financial Services Committee.

Mr Lay is now scheduled to appear before the Committee on 14 February.

On Monday, lawyers for the fomrer Enron boss said he would not attend Financial Services Committee hearing, citing a 'prosecutorial' climate among Congressional investigators.

No testimony expected

His refusal to assist the Congressional enquiry on Tuesday prompted the Senate Commerce Committee to vote unanimously in favour of serving the former Enron boss with a subpoena, legally obliging him to appear.

However, many senators expect Mr Lay to refuse to testify to either committee, invoking US laws which allow witnesses to avoid giving evidence to Congress if their testimony might be used against them in criminal investigations.

News of Mr Lay's change of heart came as Joseph Berardino, chief executive of Enron's auditors Andersen, faced a grilling from the House Financial Services Committee.

Speaking to the committee on Tuesday, Mr Berardino vehemently denied that Andersen helped set up a series of complex external financial partnerships used by Enron to squirrell away millions of dollars of undisclosed debt.

Collusion denied

"We did not help to establish. We reviewed the accounting that others developed," he said.

Mr Berardino added that auditors should grade companies' financial statements according to how watertight their accounting practices were, rather than issuing a simple "pass" or "fail."

But asked whether he acknowledged that statements prepared by Andersen did not accurately reflect Enron's financial position, Mr Berardino said he could not answer "with authority".

Some US observers say Andersen, which as Enron's auditor gave its approval to overstated accounts, deserves to be reprimanded as much as the failed energy giant.

And there has been speculation that the scandal - and especially demands for reparation - could bring about the collapse of Andersen, which employs 85,000 people in 84 countries.

Enron testimony vital

Observers said on Tuesday that the progress of the Congressional investigation will be limited in the absence of testimony from Mr Lay.

Joseph Berardino, chief executive Andersen
Joseph Berardino: denies helping to set up partnerships

Enron used a complex warren of accounts to deceive investors about the full extent of its debt.

The company went bankrupt shortly after admitting that it had inflated its profits over a four-year period, leaving thousands of investors out of pocket and depriving many former employees - who had invested in Enron stock - of their retirement savings.

"It's not possible to figure out what caused this huge Enron ship to capsize if you can't hear from the captain," said Senator Ron Wyden, an Oregon Democrat.

Repentant

While Enron executives have been keeping silent, Mr Berardino has launched a campaign to polish his firm's tarnished image.

Kenneth Lay
Kenneth Lay: Attorneys say he will attend

At a previous hearing in December Mr Berardino had said: "If my firm has made errors in judgment, we will acknowledge them. We will make the changes needed to restore confidence."

Andersen has also announced that former Federal Reserve Chairman Paul Volcker will work with Andersen in making fundamental changes in its audit practice.

Shredded evidence

Enron and Andersen are trying to shift blame onto each other over the misleading accounts.

Enron claims that Andersen billed the company an extra $5.7m for helping to set up the debt-concealing partnerships that caused the firm's downfall.

But Andersen says that Enron withheld information, and that it had voiced opposition to an Enron statement over its profits.

The investigations are made much more difficult by the shredding of key financial documents by both Enron and Andersen employees.

While Andersen is keen to stress that Mr Berardino will testify, the firm's sacked partner David Duncan - who is accused of destroying Enron related documents - refused to testify at an earlier hearing.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Manuela Saragosa
"The mounting scandal...is having a major impact on investors' attitudes to other big companies"
The BBC's Jane Hughes
"This is the beginning of the search for answers"
The BBC's Nick Bryant
"The Justice Department is still trying to build a criminal case"
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