[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 537-538]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    ENRON CORPORATION CEO SUBPOENAED

  Mr. DORGAN. Mr. President, I come to the floor of the Senate to 
discuss, just for a few minutes, the action taken this morning in the 
Senate Commerce Committee. We voted unanimously to support a subpoena 
being delivered to Mr. Kenneth Lay, who is the former chairman and CEO 
of the Enron Corporation. I want to describe for my colleagues what 
brought us to this point and why we believed we had to vote to 
authorize a subpoena being issued.
  About 4 to 6 weeks ago, Mr. Lay's attorneys told us that Mr. Lay 
would be willing to appear before the Senate Commerce Committee. That 
was in response to a request by us as we began to investigate what 
happened with respect to the Enron Corporation. As you know, this is 
the largest bankruptcy in American history. There is substantial 
information that has been available for some while now, prior to and 
since the bankruptcy, about things that had happened inside the 
corporation that cause a great deal of concern.
  A memo by one of the vice presidents of Enron was presented to the 
CEO, Mr. Lay, in August of last year. That memo by Vice President 
Watkins talked about accounting hoaxes and irregularities of sorts, and 
warned about what people would find if they dug into the partnerships 
that were being created in this corporation.
  Then, in November and December, that company's auditors, Arthur 
Andersen and Company, talked about possible illegal acts with respect 
to that corporation and the review of some documents.
  Then, last Saturday, a report that was commissioned by the board of 
directors of the Enron Corporation, the Powers report, described a 
broad range of very serious problems that went on inside that 
corporation.
  At any rate, during this period of time we had requested the 
testimony before the subcommittee and the full committee of the 
Commerce Committee by Mr. Lay. His attorneys said he would be made 
available on February 4 at 9:30 in the morning. They continued to say 
that even through last Friday and Saturday.
  On the Sunday evening before Mr. Lay's scheduled appearance, we were 
called his attorneys. They told us that Mr. Lay had changed his mind 
and he would no longer be available to testify and would therefore not 
appear on Monday morning.
  Mr. Lay's attorneys wrote a letter saying the problem was that Mr. 
Lay had heard comments about his company that concerned him. They felt 
it would probably be a prosecutorial kind of environment in the 
committee hearing on Monday, and therefore he did not want to appear.
  The fact is, the comments that were made by a number of Members of 
the Senate prior to Sunday were no different than the assertions made 
to the CEO of Enron by his own employee last August, by his accounting 
firm in November and December, and especially by his own company's 
board of directors on Saturday last.
  Mr. Lay, in my judgment, following the report by the board of 
directors of this corporation, decided that he did

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not want to talk to anybody publicly and decided to lay it off on some 
Members of Congress, saying that is the reason he did not want to come 
and testify.
  Let me tell you what was in that report, just to give one small 
example. This report says that in this corporation, one of the 
corporate officers, Mr. Fastow, in creating one of the partnerships--
incidentally, there were a lot of secret partnerships created here--Mr. 
Fastow invested $25,000 of his own money in a partnership in a 
corporation of which he was an officer. Sixty days later, that $25,000 
was $4.5 million to Mr. Fastow.
  Does anybody in this room know of investments like that? Would you 
like to make a $25,000 investment that, in 60 days, becomes $4.5 
million? Where can you do that? The lottery, but that is not a sure 
thing.
  No, this wasn't gambling inside the corporation. This was just people 
playing fast and loose with the truth and with other people's money. 
When someone takes $25,000 and turns it into $4.5 million in 2 months, 
in my judgment, that is stealing. That is just stealing--yes, quote 
unquote, stealing--from investors who own the shares in that 
corporation.
  At the same time that you have an officer of the company taking 
$25,000 and in 60 days turning it into $4.5 million, at the same time 
that is happening, one of my constituents in North Dakota is writing a 
two-page letter to me. That letter, an anguished cry from this family, 
asks the following question:

       What on Earth has happened? I worked for this company's 
     subsidiary for many, many years and have put away $300,000 
     into a retirement account. Do you know what my retirement 
     account is worth today?--$1,700; from $300,000 to $1,700.

  He and his family have lost it all. But inside that corporation we 
had people making millions.
  Was that a corporate culture of corruption? You bet your life it was. 
And the reason Mr. Lay has decided not to come to the Congress to 
testify was not because of anything anyone has said. It is because of 
what this Powers report has found that went on inside this company. I 
will give another example.
  This company decided to create a little partnership called Braveheart 
to accommodate some business they were going to do with the Blockbuster 
Corporation. They were actually going to have Blockbuster be the 
repository of movies. They were going to stream these videos or movies 
to consumers around the country. It was going to be a big business. It 
was announced in March of 2000. By February of the next year it was 
gone. But in the meantime they created a little partnership called 
Braveheart to take care of all this.
  Do you know what Braveheart did? Braveheart borrowed roughly $112 
million from a Canadian bank. Then it sold its assets to the Enron 
Corporation for slightly over $100 million. The Enron Corporation 
booked it as a business profit, when in fact all it was a bank loan 
from a Canadian bank, run through a partnership that wasn't doing any 
business at all--just a few test markets with a few customers. You tell 
me whether that is honest business.
  It is not. Can someone come to the Congress and defend that? They 
can't. That is why we have people who were at the head of this 
corporation who were unwilling to talk.
  I just wanted to make the point that the assertions by attorneys on 
behalf of principals in this corporation are suggesting that they have 
been offended because they might find a prosecutorial approach at some 
of these hearings. No one suggested that a hearing before this Congress 
would ever be a walk in the park, especially when you have a record 
inside this corporation of financial manipulation, of dishonest 
accounting, and of personal enrichment of officers and directors.
  I wanted to make that point about what we had to do this morning. We 
issued a subpoena for Mr. Lay. It was issued on a unanimous vote by the 
Senate Commerce Committee. That is nearly unprecedented. We don't issue 
subpoenas in the Commerce Committee. We have the power and authority to 
do so, but we don't do it very often. But we did it because we felt we 
had no choice.
  Mr. President, I had asked permission to speak in morning business. I 
have just a couple of other things to mention very briefly, and I want 
to do that in a separate section of morning business. How much time is 
remaining, Mr. President?
  The PRESIDING OFFICER. The Senator has 1\1/2\ minutes remaining.
  Mr. DORGAN. Let me ask if I can extend that by 2 minutes by consent.
  The PRESIDING OFFICER. Is there objection?
  Mr. SESSIONS. I will not object to that at this point. I know Senator 
Torricelli has some brief remarks. I know they both are very interested 
in these issues and it is time we talk about them, but we have a 
stimulus package on the floor and we want to get to that as soon as 
possible.
  Is 5 minutes all right for Senator Torricelli?
  The PRESIDING OFFICER. The Senator from North Dakota has the floor. 
Is there objection to his request?
  Mr. TORRICELLI. Reserving the right to object, Mr. President, I 
request at the conclusion of Senator Dorgan that I be recognized for 10 
minutes.
  Mr. SESSIONS. I have to object to 10 minutes.
  Mr. TORRICELLI. The Senator has 5 minutes. Mr. President, I hate to 
get into a bidding process, but I would like to have a reasonable 
amount of time to be recognized after Senator Dorgan.
  Mr. SESSIONS. We have business on the floor, and I know people would 
like to change the focus of our debate on the stimulus package, which 
is overdue in my view. I was willing to let the Senator have a few more 
minutes. I would not object to 5 minutes.
  Mr. TORRICELLI. I withdraw my objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from North Dakota.
  Mr. DORGAN. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. Two and one-half minutes.
  Mr. DORGAN. Mr. President, I asked for 2 minutes in addition to the 
minute and a half remaining at that point. I expect I will have 3 and a 
half minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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