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CNN Live At Daybreak

Powers Report on Enron Draws Strong Words From Commerce Committee

Aired February 05, 2002 - 06:01   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.
CAROL COSTELLO, CNN ANCHOR: A leading Democrat is calling for a special prosecutor to investigate the Enron scandal including links between the power giant and the Bush administration. As CNN congressional correspondent Kate Snow reports, there are also moves on Capitol Hill to subpoena Enron's former CEO.

(BEGIN VIDEOTAPE)

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Former Enron CEO Kenneth Lay snubbed the Senate sub committee angering lawmakers and prompting new criticism not only of Enron, but the Bush White House.

SEN. ERNEST HOLLINGS, (D-SC), COMMERCE COMMITTEE CHAIRMAN: I never seen a better example of "cash and carry" government than this Bush administration and Enron.

SNOW (voice-over): Citing Enron's ties to a host of administration officials, Hollings called for a special prosecutor to look into Enron and to subpoena to force Lay to appear on Capitol Hill next week. The White House dismissed the comments as a partisan attack calling it disappointing that some are more interested in reading off partisan Democrat attack memos and repeating unfounded and unsubstantiated allegations.

Later the Justice Department weighed in, saying there was no reason to appoint a special council because no conflict of interest exist. Lay's decision to avoid Congress came Sunday after his lawyer said lawmakers made inflammatory statements on the talk shows.

SEN. BYRON DORGAN (D), ND: There's nothing that would excuse Mr. Lay's decision not to appear before Congress. He was simply looking for a door. The fact is on Saturday evening when the Powers Commission report became available it was quite clear that that report provided a devastating look into that corporation.

SNOW (voice-over): That report released Saturday commissioned by Enron's Board and offered by William Powers.

WILLIAM POWERS, ENRON BOARD OF DIRECTORS: There was a fundamental default in the leadership of the management. And leadership and management begin at the top with the chairman and CEO Ken Lay. SNOW (voice-over): Powers did appear before Congress describing Enron's outside partnerships set up, he said, as hedges outside parties meant to cover potential losses, but unlike the way it's usually done, Enron had a stake in those partnerships and was essentially hedging with itself.

POWERS: Within Enron, the checks and balances simply broke down ...

SNOW: Powers was measured and cautious in his answers, but lawmakers wanted more, asking whether Ken Lay should have written a memo telling employees that everything would be all right.

UNIDENTIFIED MALE: Do you believe in August 21 of 2000 - 2001, excuse me, that the prospects for the company had never been better based upon your - in retrospect right now?

POWERS: No, I think they had been better. I don't think that was accurate.

SNOW (on camera): As for policy suggestions, Powers was rarely specific, but he did say he was surprised to see that accountants for Enron were providing both accounting and consulting services, something many lawmakers would like to see changed.

Kate Snow, CNN, Capitol Hill.

(END VIDEOTAPE)

COSTELLO: And the saga continues.

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