Senate committee may vote to subpoena former Enron chairman

Associated Press WriterWASHINGTON (AP) -- Former Enron Chairman Kenneth Lay canceled an appearance Monday before a Senate committee investigating the bankrupt energy giant, and lawmakers swiftly arranged to issue a subpoena to compel his testimony.

The Senate Commerce Committee plans to vote on a subpoena Tuesday morning -- 24 hours after Lay had been scheduled to testify on the largest bankruptcy in the nation's history.

"We feel the appropriate approach now is to issue a subpoena," Sen. Byron Dorgan, D-N.D., said. "He certainly has a right to claim his Fifth Amendment rights when he does appear."

The decision to seek a vote on a subpoena followed a closed-door session involving key members of the panel.

Lay canceled his testimony Monday after several senators and House members suggested on Sunday news shows that he and other company executives engaged in criminal acts.

Lay "cannot be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard," his attorney, Earl Silbert, said in letters to the congressional panels that were to hear from him.

"These inflammatory statements show that ... the tenor of the hearing will be prosecutorial," Silbert said.

Enron's former chief financial officer, Andrew Fastow, and ex-Enron executive Michael Kopper have indicated they will refuse to answer questions from Congress. Arthur Andersen auditor David Duncan, fired for his role in document shredding, invoked his Fifth Amendment right not to testify Jan. 24.

The Senate committee canceled Monday's hearing, while the House Financial Services Committee said it would proceed, minus Lay.

"I don't think he would have expected an appearance before Congress would be a walk in the park," Dorgan said Monday on network morning shows. But whether there is proof of securities fraud in the Enron collapse, Dorgan said: "I don't know that. ... There's a criminal investigation. Let's let the Justice Department determine that."

Dorgan dismissed Silbert's criticism, saying comments by members of Congress simply reflect assessments "by Enron's own accounting firm."

Andersen's chief executive testified at a House hearing in December that the accounting firm notified Enron's audit committee Nov. 2 of "possible illegal acts within the company."

A second congressional panel, the House Energy and Commerce Committee, also has raised the idea of compelling Lay's testimony. If he refuses to appear later this month, "he'll be subpoenaed like everyone else," said spokesman Ken Johnson.

On Saturday, an Enron-authorized review of several of the company's estimated 3,000 off-the-books partnerships found that the energy trader's management concealed financial information from the public.

The report, by University of Texas law school dean William Powers, said the partnerships "were used by Enron management" to enter into transactions that "apparently were designed to accomplish favorable financial statement results, not to achieve bona fide economic objectives."

Andersen was accused in the report of facilitating a series of complicated transactions aimed at helping Enron conceal big losses and debts. Andersen announced Sunday that former Federal Reserve Chairman Paul A. Volcker would head an effort to overhaul the firm's practices.

Dorgan said the Powers report is "a pretty devastating indictment of things that went on inside the corporation. The report would suggest that as CEO, Mr. Lay certainly was aware of much of this."

"Ken Lay obviously had to know that this was a giant pyramid scheme -- a giant shell game," Sen. Peter Fitzgerald, R-Ill., said on NBC's "Today." Rep. Billy Tauzin, R-La., who chairs the House energy committee, asked whether "maybe somebody ought to go to the pokey for this."

In his letters to Sen. Ernest F. Hollings, D-S.C., and Rep. Michael Oxley, R-Ohio, Silbert said "Mr. Lay firmly rejected any allegations that he engaged in wrongful or criminal conduct."

Hollings chairs the Senate Commerce Committee, Oxley the House Financial Services Committee.

The Financial Services Committee's chief counsel called Lay's decision not to appear at the panel's Tuesday hearing "a most serious matter."

"We sought Mr. Lay's testimony in good faith and were assured it would be given," Terry Haines said in a letter to Silbert. "I have called and e-mailed you, but have not heard from you. I await your call as soon as possible."

The Powers review of Enron also found that a key document was missing from a partnership deal. Lay says he was unaware of the transaction and former Enron chief executive officer Jeff Skilling says he was did not know the terms.

Tauzin said Skilling, who left the company last summer after only six months as CEO, backed away from signing his name to off-the-books partnership deals.

"What does that say about his knowledge of whether these deals were honest or corrupt?" Tauzin said.

"We found out that one of the good guys ... went to Skilling and brought him all these deals to get his signature on it. He refused to sign it."