Senators call for FTC investigation into Enron collapse
Monday, December 24th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ The Federal Trade Commission is being asked to investigate consumer issues surrounding the collapse of Enron Corp., such as why executives were allowed to cash out their stock while other employees were forced to hold the sinking shares.
The request came from the chairmen of the Senate Commerce Committee and its consumer affairs subcommittee, who began hearings last week on the energy giant's failure.
Sen. Byron Dorgan, who chairs the subcommittee, said Monday that FTC officials assured his staff they were likely to open such a probe in January.
``This is a scandal that has yet to be disclosed,'' Dorgan, D-N.D., said Monday in an interview. ``The big guys got rich and the little guys lost their shirts.''
The beleaguered energy trading company filed for bankruptcy Dec. 2 after acknowledging it overstated profits for four years and kept billions of dollars in debt off its books through questionable outside partnerships
Dorgan and Commerce Committee Chairman Ernest ``Fritz'' Hollings, D-S.C., wrote FTC Chairman Timothy J. Muris on Dec. 21 seeking an investigation specifically into whether Enron violated fraud or consumer protection laws.
The senators asked the agency to examine allegations of commercial fraud, inaccurate and misleading disclosures, unlawful accounting practices and illegal partnerships with third party entities.
Allegations of accounting irregularities, insider trading and pension law violations already are being investigated by the Securities and Exchange Commission and the Justice and Labor departments.
``We believe that the impact of this failure extends well beyond possible violations of securities regulations,'' Hollings and Dorgan said in their letter. ``Each of the federal government's major law enforcement and consumer protection agencies must be involved in investigating Enron's operations.''
Last week, an Enron employee and company retirees told Dorgan's subcommittee that their life savings were wiped out when the company's stock fell from nearly $90 a share a year ago to less than $1 in early December.
Dorgan said that Enron Chairman and CEO Kenneth Lay, a friend of President Bush and a big campaign contributor, confirmed through his attorney that he will testify at the next hearing, scheduled for Feb. 4.
While ordinary employees were prohibited from selling company stock from their Enron-heavy 401(k) accounts, Enron executives cashed out more than $1 billion in stock when it was near its peak, lawmakers said.
``If they were selling stock while they were encouraging others to buy, it raises serious questions,'' Dorgan said Monday. ``They must have had some knowledge of the substantial risk.''