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American Morning

Handful of Key Players From Enron Expected to Appear at House Hearing Today

Aired February 07, 2002 - 09:08   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, the Enron hearings. A handful of key players from the bankrupt energy giant are expected to appear at a House hearing today. But some of them aren't expected to say much.

Jonathan Karl has a preview.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CORRESPONDENT (voice-over): It will be an encore performance for the Fifth Amendment, last seen when Arthur Andersen auditor David Duncan was dragged before the same committee last month.

UNIDENTIFIED MALE: On the advice of counsel, I respectfully decline to answer the question.

KARL: This time, Andrew Fastow, former Enron chief financial officer, will appear. A blockbuster witness, to be sure, but his lawyers have told the committee he will invoke his Fifth Amendment right not to talk. So will three others.

REP. BILLY TAUZIN (R), LOUISIANA: I'm not going to give anyone an excuse not to come and testify. But if they want to take the Fifth, then that's their right.

KARL: The Powers Report, commissioned by Enron's board, portrays Fastow, who became the chief financial officer at just 36 years old, as the key player in setting up the partnerships, which helped inflate Enron's profits by $1 billion. Fastow refused to talk with the powers committee, but in a 1999 interview with "CFO" magazine, he boasted about his financial wizardry.

(BEGIN AUDIO CLIP)

ANDREW FASTOW, FMR. ENRON SR. VICE PRES./CFO: Given the nature of our business, our credit rating is of strategic importance to us. We've had to I think be very creative.

(END AUDIO CLIP)

KARL: According to the Powers Report, Fastow personally profited from partnerships that ultimately led to Enron's demise. WILLIAM C. POWERS, ENRON BOARD OF DIRECTORS: We found that Fastow and other employees involved in these partnerships enriched themselves in the aggregate by tens of millions of dollars that they should have never received.

KARL: According to Powers, Fastow received at least $30 million from the partnerships, including one in which he turned a $25,000 investment into $4.5 million in just two months.

But while Fastow won't talk, former CEO Jeffrey Skilling says he will.

TAUZIN: Skilling is apparently anxious to testify. He thinks he's got an explanation for all this, and he was right to do everything he did, and we were wrong in our interpretation of it. I'm anxious to hear his explanation.

KARL: Skilling abruptly left Enron last August, saying he wanted to spend more time with his family. Among other things, the committee will want to know what he knew over the past three years, while he made $110 million cashing in his stock options.

(on camera): In a bit of pre-hearing maneuvering, the committee has released controversial memos showing that Skilling never signed off on transactions involving Fastow's partnerships, despite repeated requests for his signature. The committee's investigators say they want to know why, if he thought the partnerships were legal, he didn't sign on the dotted line.

Jonathan Karl, CNN, Capitol Hill.

(END VIDEOTAPE)

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