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American Morning

Will Congress Learn Anything From Ken Lay?

Aired February 12, 2002 - 08:15   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: The big question this hour, will Congress learn anything from Ken Lay? The former Enron chairman and CEO is expected to take the oath and then the Fifth. His appearance comes as another incriminating memo surfaces. The "Wall Street Journal" reports the documents show that Lay had a direct role in approving one of those controversial partnerships run by an Enron executive.

Well today's Senate hearing is set to begin next hour, and Democratic Senator Byron Dorgan of North Dakota is the chairman of the subcommittee holding the hearing. He joins us now from Capitol Hill. Welcome back, sir.

SEN. BYRON DORGAN, (D) NORTH DAKOTA: Good morning, Paula.

ZAHN: I don't know whether you've had a chance to read this "Wall Street Journal" story, but apparently this memo makes it clear that Ken Lay at least had a very direct role in approving one of these partnerships. Do you have any evidence that also suggests that?

DORGAN: Well, there's evidence in the minutes of the board of directors' meetings that Mr. Lay was involved in meetings over a period of time in which these partnerships were formed and also discussed. So there's some of that in the many boxes of information we've received from the corporation.

ZAHN: This piece also suggests that Jeffrey Skilling's signature can be seen on one of these memos, indicating he did know about one of these partnership agreements entered into. When, of course, he testified he didn't know anything about it.

DORGAN: Yeah. I mean, I've not seen that. But it's hard to believe that the people at the top who have a reputation of knowing what was happening inside the corporation didn't know what was really happening. When you see the board of directors' report that says $1 billion of profit was overstated in just the most recent year period, how could you not know that at the top? I mean this made a mockery of honest accounting.

And, you know, the story again is that the people at the top made millions and millions of dollars and the people at the bottom lost their life savings. That's what has happened in this case and that's why it's such a scandal.

ZAHN: You expect Ken Lay to take the fifth today, right?

DORGAN: We're told he will.

ZAHN: And then I understand you expect him to take the fifth again on Thursday, when he is called to testify.

DORGAN: Well that would be before the House. But my understanding is his attorneys have told him that he would be in some jeopardy without taking the fifth. You know he has indicated he really wants to tell his side of the story. His wife was on NBC saying that he really wants to tell his side of the story. This morning at 9:30 is the opportunity for him to do that.

I think the American people, his employees, stockholders and the Congress, will all be better served by him telling about what he knows inside this corporation. This is the largest bankruptcy in corporate history in America. And as I said, there's really a mockery of honest accounting inside this corporation's books. The board of directors themselves said that what happened here was just really awful. It's a devastating indictment of the leadership of this corporation. And we need to put the pieces together to see exactly what the total story is.

ZAHN: Based on the pieces you've seen thus far, do you see anything leading to criminal charges?

DORGAN: That decision is up to the Justice Department. There's an active criminal investigation going on, but I think you can infer from the fact that lawyers are asking clients -- or counseling clients to take the fifth amendment, you can infer that some attorneys are concerned about that criminal investigation. But I think the judgment, of course, is up to the Justice Department.

ZAHN: You fully expect, as you've said, Ken Lay to take the fifth later today. How does that impact your investigation if he does do that?

DORGAN: It makes it harder to get to the bottom of this, but we will. I mean, ultimately, we will dig around and find out exactly what happened. We'll get all the pieces put together. But it would be much easier and much quicker if we have the principals in the Enron corporation talking and telling us what happened. Without their testimony, we will receive testimony and information from others. And we'll eventually piece all of this together and understand who did what and who was accountable and how it happened.

ZAHN: You eventually will hear from William Powers, I guess, who's expected to testify tomorrow...

DORGAN: Yes.

ZAHN: ... who wrote the scathing report on how Enron operated. What else do you expect to learn from him?

DORGAN: Well actually Mr. Powers will follow Mr. Lay today, so we'll hear his testimony. He has testified once in the House of Representatives. There is much that's happened since he last presented testimony. Now his testimony, as know, is a report that was commissioned by the board of directors of the corporation itself. So one would expect that this is the best case you can make. I mean the board of directors is not going to ask them to put together the worst case. So this is the best case, and this case is a scathing indictment of what went on that corporation.

Once again, this is a publicly traded corporation, and it overstated profits by $1 billion in a recent year? I mean how can you do that? How can you misplace $1 billion or claim to have $1 billion that didn't exist? So we will ask Mr. Powers a lot of questions about information we have learned since he last testified. And I think this will be the start of a trail that we'll get to the end of at some point, and fully understand what has happened here and how we can prevent it from happening again.

ZAHN: Senator, one final question for you. What role may immunity ultimately play in this investigation?

DORGAN: Not in my judgment. I don't support providing immunity to anyone. I think if we did that here in Congress, we would jeopardize the investigation over injustice with respect to the criminal investigation. So I do not support providing immunity to any witness at this point.

ZAHN: We appreciating your coming in, in advance of the hearings later today. We will be covering them live here at CNN.

DORGAN: Thanks, Paula.

ZANH: Senator Dorgan, always good to see you. Thanks for you time -- Jack.

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