Investigator fears 'dozens of Enrons'

A senior Congressional investigator in the Enron scandal has said he thinks there could be "dozens" of US firms misleading investors about their finances.

Enron collapsed after huge debts hidden in a web of partnership firms came to light.

James Greenwood, who chairs the House Committee on Energy and Commerce's Subcommittee on Oversight and Investigation, said the break up of Wall Street investment banks was among the recommendations being considered by his inquiry.

Mr Greenwood's subcommittee works in tandem with the House Energy and Commerce Committee chaired by Billy Tauzin, who subpoenaed senior Enron executives.

'Not credible'

In an interview with the BBC's World Business Report, Mr Greenwood made it clear he had difficulty believing Congressional testimony given by Enron's ex-chief executive Jeff Skilling and viewed it as "not credible".

James Greenwood says Enron story 'defies reason'

Mr Skilling, who resigned as Enron chief executive last August, has said he was unaware of the hidden debts that led to Enron's downfall.

The coming week will be a busy one on Capitol Hill for hearings into Enron's collapse.

Mr Skilling is due to testify again on Tuesday, along with other top Enron executives, including whistle-blower Sherron Watkins and company president Jeffrey McMahon.

Pointing to the ex-chief executive's reputation as a micro-manager, Mr Greenwood said: "It is very difficult to conceive how hundreds of millions of dollars of transactions could be done in partnerships off the books of the company without his awareness."

"I think it will come actually to the FBI and the Securities and Exchange Commission (SEC) to determine in a court of law whether he has perjured himself and whether he is guilty of fraudulent practices."

He also questioned whether ex-Enron chairman and chief executive Ken Lay had done his utmost to trace and solve the problems.

I also subscribe to the cockroach theory that if you see one scuttling across the floor, there are probably others under the baseboar

James Greenwood

Conflicts of interest?

Mr Greenwood's subcommittee is also trying to draw up proposals to ensure transparency in accounts and end potential conflicts of interest inside audit firms and investment banks.

The practices that led to Enron's downfall were "not commonplace" but neither were they a one-off and have certainly been used by other firms, he said.

"I think if even a very small fraction of the corporations in the US is guilty of these kinds of infractions, that could mean dozens of them not just a couple of them".

Although his inquiry is still a long way from any final conclusions, it is clear there are conflicts of interest within Wall Street firms that put investors at risk of biased information, he said.

"I've not come to the conclusion that they should be broken up yet, but I have come to the conclusion that it is a real area of concern and potential conflict," he said.

Busy on the Hill

Another inquiry, by the Senate Government Affairs Committee, will ask Wall Street banks on Wednesday to explain why they maintained "buy" recommendations on Enron's stock as the company slid into ruin last autumn.

Three Enron-related hearings will take place on Tuesday.

The Senate Banking Committee will examine proposals for tighter rules for accountants.

Mr Skilling is due to appear before the Senate Commerce Committee, when he will be asked to explain discrepancies between his account and that of other Enron executives.

The senators "come to the hearing hungry for information", said Barry Piatt, spokesman for panel member Senator Byron Dorgan, a Democrat from North Dakota.

"They want to put it all together and resolve what appears to be differences."

And the powerful House Ways and Means Committee will examine pension laws after thousands of Enron employees lost their retirement funds.