WASHINGTON (AP) _ Enron's business practices had the mark of ``a massive shell game with multiple layers of conflict of interest,'' says a senator who plans to subpoena documents as part of a broad investigation into the energy company's collapse.
Sen. Carl Levin, D-Mich., chairman of the Governmental Affairs investigations subcommittee, said his committee will within weeks subpoena documents from Enron's board of directors, senior managers and its auditing firm.
At the same time, the full Governmental Affairs Committee will hold a hearing Jan. 24 into why government regulators failed to see the ``red flags'' at Enron and protect investors and the company's employees who have lost hundreds of millions of dollars as Enron stock plummeted.
Enron Corp., filed for bankruptcy Dec. 2 as its stock fell from a high of $90 a share a year ago to less than $1. Thousands of Enron workers were prevented from selling Enron stock in their 401k retirement plan during the collapse.
Sen. Joseph Lieberman, D-Conn., the full committee's chairman, promised Wednesday ``a search for the truth, not a witch hunt.'' But he did not rule out an examination of Enron's relationships with the Bush administration.
``We're going to go wherever the search takes us,'' Lieberman said at a news conference, noting Enron Chairman Kenneth Lay's involvement in crafting the administration's energy agenda last spring. ``We've got to ask whether the advice rendered (by Lay) was at all self serving.''
Lay, a longtime friend of the president, was a prominent contributor and fund raiser for Bush's presidential campaign. Other Enron executives also gave significantly to Bush's campaign, according to the watchdog Center for Public Integrity.
The Senate committee's initial focus will be on why the Securities and Exchange Commission, Federal Energy Regulatory Commission and other regulators did not foresee the problems and raise concern about Enron's business practices.
``The untimely and wholly unexpected failure of a corporate giant like Enron is an alarm call to all of us in government,'' said Lieberman. He said it has sent shockwaves into the investment community and concern about energy industry deregulation.
Levin's subcommittee planned to target Enron's board of directors and auditors to determine what they knew of Enron's sometimes secretive business dealings, including the use of questionable partnerships and what Levin called ``offshore entities.''
Internal Enron documents reportedly show that top company officials were directly involved in the creation and oversight of the partnerships, and that they viewed them as crucial to company growth _ even as they disguised an estimated $500 million in Enron debt not included on the company's books.
The procedures set up by Enron required former chief executive and president Jeff Skilling and two other senior Enron officials to approve all transactions with the partnerships, the Wall Street Journal reported Wednesday, citing the documents.
Levin said he was dismayed about ``what appears to be a massive shell game with multiple layers of conflict of interest'' that contributed to Enron's collapse at a time when most investors believed the company to be thriving.
Top Enron executives and directors ``apparently reaped almost $1 billion in stock sales in 2000 and 2001,'' said Levin, while hundreds of Enron workers were barred from selling Enron stock in their 401k retirement fund during the company's collapse.
Maine Sen. Susan Collins, the subcommittee's ranking Republican, said in a statement that she wants to know whether Enron executives and board members, when selling their stock, ``knew of the company's impending financial situation.''
Enron _ once the seventh largest in the country in terms of revenue _ filed for bankruptcy protection on Dec. 2.
Last month, during a House hearing, Arthur Andersen LLP defended its work for Enron, but its chief executive conceded shortcomings in the accounting profession. ``Our system of regulation and discipline will have to be improved,'' said Anderson chief Joseph Berardino.
On Wednesday, Andersen released the results of an independent review that found the company's work provides ``reasonable assurance of compliance with professional standards.'' The review was conducted by another accounting firm, Deloitte & Touche.
The Senate Governmental Affairs Committee is among a half dozen committees and subcommittees expected to hold hearings in both the House and Senate in the coming months on Enron's collapse, one of the largest ever. The Securities and Exchange Commission and the Labor Department also have investigations under way.