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American Morning

Kenneth Lay Announced His Resignation

Aired January 24, 2002 - 07:23   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.
JACK CAFFERTY, CNN CORRESPONDENT: All right, let's turn now to the subject of Enron. Kenneth Lay, as we mentioned, the chairman and chief executive officer of the company, announced his resignation, blaming all of the multiple inquiries and investigations for requiring just too much of his time. "It is becoming increasingly difficult to concentrate fully on what is most important to Enron's stakeholders." This is the statement he released yesterday.

CNN has obtained two more internal memos from Arthur Andersen. The employees there discussing concerns about misleading investors in an Enron press release. One memo dated October the 15th was written by the recently fired Andersen executive, David Duncan, who is scheduled to appear in Washington this morning before one of two congressional hearings scheduled for today.

And the "New York Times" reports that a House subcommittee chairman says investigators have determined document shredding at Andersen was widespread and may have involved as many as 80 people.

CNN's Allan Chernoff joins us this morning from Washington, D.C.

And this is going to be some show. I can't believe this Ken Lay statement saying that suddenly he is just overwhelmed with the concern for the welfare of the stakeholders in the company and so he's got to step aside because he's distracted. Come on! How can he say that with a straight face?

ALLAN CHERNOFF, CNN CORRESPONDENT: Jack, let's talk about that. First of all, Ken Lay clearly was forced out by the creditors' committee. The creditors' committee, after all, is pretty much running the show because they are owed billions of dollars and that's the way things tend to work in bankruptcy court. Keep in mind, Enron is now in Chapter 11 bankrupt.

Lay in his statement did say, "Multiple inquiries and investigations require much of my time." Perhaps an understatement.

Well, as you said, Jack, two of those inquiries will get under way today here on Capitol Hill, one on the Senate side, one on the House side. Likely to be much more drama on the House side. As you mentioned, David Duncan is expected to show there had been a struggle between Mr. Duncan's attorneys and investigators on the House side. But Mr. Duncan expected to show now, he, of course, the partner from Andersen fired now who had been in charge of the Enron audit. Now, he, according to Andersen, had directed the destruction of all those documents at Andersen, the auditing firm. He said he was only following orders from a company memo written by an in-house attorney, Nancy Temple, and she also is scheduled to testify this morning -- Jack.

CAFFERTY: Did you hear about the possibility that Duncan may take the fifth amendment and refuse to answer some of these questions?

CHERNOFF: Jack, there was a battle between the attorney for Mr. Duncan and the staffers for the House Energy and Commerce Committee. Mr. Duncan did not want to appear at all. They were insisting here at the House that he does show. They said they'd cite him for contempt of Congress if he did not show, even though they recognize that he would, most likely, invoke his fifth amendment right.

CAFFERTY: Well, it's going to be some show to watch.

I appreciate you giving us a preview, Allan. We'll talk to you some more a bit later.

Allan Chernoff in the nation's capital.

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