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American Morning

Rep. Tauzin Leads Charge Against Enron, Anderson

Aired January 24, 2002 - 08:05   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.
PAULA ZAHN, CNN ANCHOR: Up front this morning, Enron. On the eve of two congressional hearings investigating the company's collapse, embattled CEO, Key Lay, called it quits, saying the company needed to focus on restructuring while he was being distracted by the investigations.

One of those investigations is being conducted by the House Energy and Commerce Committee chaired by Congressman Billy Tauzin. He and his team of investigators have been hot on the trial of documents and witnesses related to Enron and the accounting firm, Arthur Andersen.

CNN's congressional correspondent Kate Snow has a preview.

(BEGIN VIDEOTAPE)

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Billy Tauzin is a busy guy.

REP. BILLY TAUZIN (R), CHMN., ENERGY COMMERCE CMTE.: Well, that's great.

SNOW: So are his investigators, sifting through documents, flying to Houston for interviews.

UNIDENTIFIED MALE: Would you like to correct the records, since you are under oath?

SNOW: Tauzin has never shied away from controversy. He led the charge against Ford and Firestone, questioned network news execs about their coverage of Election 2000 and demanded the Red Cross justify how it disbursed funds to September 11 victims. In the words of Tauzin spokesman, "Now it's time to take Enron and Andersen to the woodshed."

TAUZIN: You're not going to deny us the facts in this hearing. We're going to find them. We're going to get them, and if anybody has been about destroying or shredding or hiding information from us, we're going to call you to task for it.

SNOW: It might seem like Tauzin is in an awkward position. After all, as a high-profile chairman, Tauzin has raised millions in campaign contributions, including money from both Enron and Andersen. In fact, Tauzin tops the list for Andersen contributions to House members, 57,000 since 1989. SCOTT HARSHBARGER, COMMON CAUSE: The fact that there are particular campaign contributions doesn't in and of itself mean they should recuse themselves. It does, though, put a big burden on them to make sure that their actions speak louder than their words.

SNOW: The money leads to talk, talk that Tauzin is being tough just to prove he's not beholden to Andersen, talk that Tauzin dismissed.

TAUZIN: Now, it's not about relationships. Whether you're a good guy, a bad guy, a friend or foe, if you do something wrong in this country, our committee is going to be on your.

SNOW: At Thursday's hearing, the focus in on Andersen. All four witnesses are linked to the accounting company, not Enron. Publicly, Democrats say they hope Tauzin's investigation will eventually broaden. Privately, Democrats wonder why Tauzin isn't going after Enron up front, particularly in light of allegations this week that Enron, too, was destroying documents.

(on camera): One Democratic lawmaker says Tauzin is being a loyal Republican soldier, trying to divert attention away from Enron to protect the president. Tauzin says he's not coordinating with the White House, just putting first things first.

(voice-over): When you are criticized by all sides, Tauzin says, you're probably doing something right.

Kate Snow, CNN, Capitol Hill.

(END VIDEOTAPE)

ZAHN: And House Energy and Commerce Committee Chairman, Louisiana Republican Bill Tauzin joins me now from Washington -- good to see you again, sir -- welcome.

TAUZIN: Good morning, Paula.

ZAHN: Before we talk about what is going to happen today during these hearings, I just want to get some very direct questions out of the way to you. You just heard Mr. Harshbarger talk about maybe it wasn't necessary for you to recuse yourself from this investigation, but you have obviously accepted some $57,000 in campaign contributions from Arthur Andersen. He said basically, what that does is put a burden on you to have your actions speak louder than your words. Do you agree?

TAUZIN: No more so than when we did the Ford-Firestone investigations. Ford and Firestone were contributors to campaigns of myself and other members of our committee, but I think our actions spoke very clearly that we are not going to allow any company in this country, friend or foe, to do things wrong to the American public without having to answer for it before our committee.

The same is true here, whether Arthur Andersen and Enron are friends or foes of any members of the Congress or my committee. If they have done something, and it appears that they have done a lot of things wrong here, they're going to have to answer for it before our committee and before other agencies.

ZAHN: Did you ever consider recusing yourself?

TAUZIN: No. I mean, first of all, Paula, I don't -- my committee doesn't accept donations illegally from anyone. And over all of the years I've been in Congress that raises a report coming out many millions of dollars for myself and other members of the House, I don't -- I take a very clear attitude about that. No one ever donates to me and expects anything for it. If they do, they ought to keep their money. It doesn't work that way. We're going to do our job, and in this case, we're going to aggressively pursue whatever wrongdoing occurred.

Most importantly, we're going to try to find out what went wrong, so it doesn't happen again. As we did with Ford and Firestone, our job is to make sure our laws are adequate, and if they aren't adequate, we're going to make them adequate. And if people aren't protected, we're going to make sure people are protected.

ZAHN: You and your committee have developed a lot of information going into this hearing today.

TAUZIN: Yes.

ZAHN: Based on what you know today, can you predict criminal indictments?

TAUZIN: I would not be surprised, Paula, if some criminal indictments came out of this, primarily out of this concern we have about destruction of documents. There is a very clear principle involved here. Once accountants or Enron officials are aware that an investigation or litigation is likely, they are duty bound under the law not to destroy documents that are relevant to the case. And if they do so with the intent to obstruct that investigation, that is a potential criminal charge involved. That's why my committee is working very candidly with the Justice Department and with the SEC, so that we do nothing in our investigation to impede or in any way get in the way of those criminal investigations as well.

ZAHN: Sir, how troubled are you by the reports in "The New York Times" that as many as 80 employees of Arthur Andersen may have shredded documents?

TAUZIN: Well...

ZAHN: Doesn't that make it a lot harder for them to argue that they were rogue workers, and they (UNINTELLIGIBLE) work here?

TAUZIN: Oh, yes. More importantly, as you will see in our hearing today, we have discovered that there were early conversations about the problems at Enron, that Enron may have been clearly misleading its investors by understating debt and overstating income and hiding through error big billion dollar losses. And knowing this early in the process and not reporting it to the SEC, not reporting it to the Enron board, so the Enron board might be put on notice legally to do something about it, you know, we have discovered a lot of information indicating prior knowledge at an early stage when investors and government agencies probably should have been told about what was going on.

We also -- as I saw your earlier report, we're also going to follow up with some severe hearings on Enron. We were scheduled to do that next week. I think it's going to be about two weeks from now, because we're going to look into the question of Enron destruction of documents as well. We now have reports, we have not yet substantiated those reports, that Enron officials may have done exactly what Arthur Andersen officials were doing, and that is massively destroying perhaps relevant documents.

ZAHN: Let's come back to the Arthur Andersen part of this.

TAUZIN: OK.

ZAHN: The head of the company, Joseph Berardino, has been subpoenaed by your committee. He will not appear before it. How can you explain that when he seems to have plenty of time to go on TV talk shows like -- or news shows like "Moneyline" and "Meet the Press?"

TAUZIN: This is...

(CROSSTALK)

ZAHN: Does he have a good reason for not being there?

TAUZIN: No, in fact, we insisted that either he or his designee in charge of the document retention and destruction policy appear today. He is sending his designee voluntarily. So we're going to get the testimony we want from the person in charge of the document destruction policy, if you will, at Arthur Andersen. And if necessary, we'll get Berardino himself before the committee at an appropriate time.

This is the first time since I've been chairman where we've actually had to issue subpoenas to compel the appearance of witnesses. In the Firestone case and in the case of the executives at the networks and (UNINTELLIGIBLE) coverage in the Red Cross case, all of the investigations we have conducted so far, we had voluntary compliance. And I'm rather frankly disturbed that we've had to issue subpoenas in this case.

ZAHN: Congressman, we only have about 10 seconds left. We know that David Duncan, a key figure in this case, has said that he potentially will the Fifth, unless he is granted immunity.

TAUZIN: Yes.

ZAHN: What are the chances he will be granted immunity? And what will that mean for the criminal probe if that happens?

TAUZIN: Well, keep in mind, Paula, we have four-and-a-half hours of testimony and interviews with David Duncan prior to the time his lawyers got a hold of him and told him not to talk anymore. So we have a body of information. We're going to read some of that into the record today. Even though Mr. Duncan takes the Fifth, we have a lot of information, as I said already, gathered. He has the right to do that under our Constitution. If he takes the Fifth, I suppose then it becomes a question of whether the Justice Department would want to give him immunity from prosecution. We will not make that decision, but Justice will.

ZAHN: Do you think Justice would make that decision?

TAUZIN: I don't know. It depends upon on what they find in their investigation. As you know, FBI officials are in Houston as we speak, checking into the questions of destruction of documents.

ZAHN: All right. Representative Billy Tauzin, thank you very much for joining us in advance of...

TAUZIN: Thank you, Paula.

ZAHN: ... your committee's hearings a little bit later on this morning -- appreciate your time.

TAUZIN: Thank you.

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