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Ashcroft Recuses Himself From Investigation of Enron Collapse

Aired January 10, 2002 - 14:52   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Right now we want to bring in Allan Chernoff to update us on another story that we've also been covering here, a story that had some breaking developments this afternoon, some announcements out of Washington that Attorney General John Ashcroft is recusing himself from the Justice Department's investigation into the collapse of Enron. That's a massive collapse of the energy trading company in Houston, Texas, that basically dragged down a lot of 401(k) plans from around the country along with it.

We understand that the attorney general has recused himself because of campaign contributions made by Enron that he benefited from. So that's something that we'll also be looking into in days to come. But there's also another question about the wider business implications of that collapse, and perhaps the investigation, as well. Allan Chernoff is here to talk about that with us.

Allan, is it clear yet exactly how wide the ripples from this are going to go?

ALLAN CHERNOFF, CNN CORRESPONDENT: Well, there's no question the ripples are going to be massive. I mean, this is already the biggest bankruptcy case in U.S. corporate history. And of course, it is a growth industry now, the investigations of Enron. Not only do we have the Justice Department now heading up this now centralized investigations, which I should point out, has actually been going on for several weeks. But what Justice has decided to do is to consolidate the various U.S. attorneys that have been looking into this.

But of course, we also have the SEC looking into it. We have the Treasury Department, the Labor Department, the Commerce Department, various Congressional committees. The list goes on and on.

HARRIS: Do we know yet exactly what the total figure is of the loss to the 401(k) plan members?

CHERNOFF: No, not at all. No, we don't have an actual number on that.

HARRIS: Will we ever get a number?

CHERNOFF: Well, the lawyers certainly are trying to tally that up. But I really don't know if you can actually come up with a whole number there, because it's also a matter, when do you count the losses? Do you look at when these 401(k) plans were at their maximum level, or at what point would you make that loss number, would you actually start to do the accounting? So, obviously, the stock of Enron was a very volatile stock, so it would be very difficult to give a precise figure for that.

HARRIS: Let me ask you about something that John King mentioned in his report earlier. Now, one of the things that has also come out is the fact that some top Enron executives actually have met with Vice President Dick Cheney, and also with Treasury Secretary Paul O'Neill in the past. And at one point, there was some talk about perhaps these executives went -- I believe it was Ken Lay -- is he CEO, or is he chairman? Let me get my notes here.

We understand that he actually met with Secretary Paul O'Neill, and Commerce Secretary Don Evans. And they did so late last year. And there was -- right now, they're looking into this, whether or not they were asking, those gentlemen at the time, to step in government- wise, to have the government step in and help Enron here in this case. Secretary O'Neill says, at the time, no, he didn't think that the wider implications of any problems at Enron would further hurt the economy in a massive way.

Now that we've got 20/20 hindsight working for us right now, does it look as though Treasury Secretary O'Neill was right about that?

CHERNOFF: I think the treasury secretary was right. Obviously, the economy was in recession well before Enron went into bankruptcy, which occurred at the beginning of December. The issue really is the damage that was done to the 401(k) holders, the retirees from Enron, the employees of Enron. It's not a matter of Enron actually causing that much damage to the economy as a whole.

In fact, when Enron fell out of the trading business, which is what built the company up, many competitors quickly stepped in to fill in the gaps. So it has not been a devastating impact at all, to the economy, more to individuals.

HARRIS: Gotcha. And now that I have my notes, Ken Lay was Enron chairman. A day late and a dollar short, here. Allan Chernoff, thank you very much. We sure appreciate it. We'll be talking about this in the future, no doubt.

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