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Lay pulls out of scheduled congressional testimony

| Monday, Feb. 4, 2002

WASHINGTON (AP) - Former Enron chairman Kenneth Lay pulled out of this week's scheduled congressional testimony on Sunday, with his lawyer saying that hearings have taken on a ''prosecutorial'' tone.

''I have instructed Mr. Lay to withdraw his prior acceptance of your invitation,'' Lay attorney Earl Silbert said in letters to the Senate and House panels that were to hear from him today.

''He 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,'' Silbert added.

Lay had agreed to appear voluntarily and thus was not obligated to show up.

In the letters, Silbert cited remarks on yesterday's talk shows by various members of Congress suggesting there was rampant criminality at Enron.

''These inflammatory statements show that judgments have been reached and the tenor of the hearing will be prosecutorial,'' wrote Silbert.

''Mr. Lay firmly rejected any allegations that he engaged in wrongful or criminal conduct,'' the attorney wrote Democratic Sen. Ernest Hollings of South Carolina and Republican Rep. Michael Oxley of Ohio. Hollings chairs the Senate Commerce Committee, Oxley the House Financial Services Committee.

A spokesman for the House Energy and Commerce Committee, which had planned to invite Lay to testify later this month, said, ''It was clear to us that he was looking for any little excuse to wiggle off the hook.

''As the old saying goes, 'you can run but you can't hide,''' said the spokesman, Ken Johnson. If Lay refuses to testify, ''he'll be subpoenaed like everyone else,'' said Johnson.

Appearing yesterday on NBC's ''Today'' show and on MSNBC, Sen. Peter Fitzgerald, an Illinois Republican, said that ''Ken Lay obviously had to know that this was a giant pyramid scheme - a giant shell game.''

Sen. Byron Dorgan, a North Dakota Democrat, called Enron ''almost a culture of corporate corruption.'' Rep. Billy Tauzin, a Louisiana Republican, asked whether ''maybe somebody ought to go to the pokey for this.''

''They were doing almost no business, but they manufacture income from a bank loan,'' said Dorgan, who appeared with Tauzin on NBC's ''Meet the Press.''

''That's the kind of thing that went on over and over and over again. We want to know what Ken Lay knew.''

Dorgan was to preside at a Senate Commerce Committee hearing today where Lay was scheduled to testify. Tauzin's panel plans three Enron hearings this week.

An internal probe of Enron led by University of Texas law school dean William Powers stated 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 unaware of the terms.

''We have not located any Enron Deal Approval Sheet, 'DASH,' an internal document summarizing the transaction and showing required approvals,'' stated the report. The report noted the same type of situation in another transaction as well, and the report raised the possibility that no approval sheet was ever prepared.

Tauzin said that Skilling 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,'' Tauzin said. ''He refused to sign it.''

Citing a company rife with conflicts of interest, Tauzin said that in one deal, a man and his girlfriend at Enron actually negotiated with each other.

''They were really sweethearts, ended up getting married,'' said Tauzin. ''When they signed the deals, they signed as married partners, one against the other.''

Dorgan said the question of criminality is ''a judgment for the U.S. Justice Department'' to make, but he added that ''$1 billion in profit was booked here that didn't exist. That's trouble.''

On CNN's ''Late Edition,'' Reps. Jim Greenwood and Henry Waxman argued over the political dimensions to the Enron controversy.

''I hate to see this turned into a political scandal,'' said Greenwood, a Pennsylvania Republican and chairman of the House Energy and Commerce oversight and investigations subcommittee. Powers is to testify Tuesday before the panel.

Waxman, ranking Democrat on the House Government Reform Committee, said hundreds of thousands of dollars in Enron donations to Republicans and Democrats over the years had resulted in weakened regulatory oversight of the company.

''Those who stopped the police'' from looking at Enron ''bear some responsibility as well,'' said Waxman.

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