Return to Transcripts main page

CNN Sunday Morning

Report Says Enron Execs Violated Accounting Rules

Aired February 03, 2002 - 08:03   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.
MILES O'BRIEN, CNN ANCHOR: More now on that report on the Enron collapse -- the so-called Powers Report -- that says execs made millions in the off-the-book partnerships, while Enron violated basic accounting and ethical rules. The report says Enron management "...spent considerable time and effort working to say as little as possible about those controversial partnerships." Many only serve to inflate Enron's earnings and to hide company losses. The report also says such transactions "should have raised red flags for senior management, as well as for Enron's outside auditors and lawyers."

Enron's board of directors commissioned the report, which has been filed with the federal bankruptcy court in New York. Enron issued the statement, saying it deeply regrets the past transactions and is now forming a restructuring committee.

Meanwhile, in the Enron investigation, the Justice Department has told the Bush administration to retain all Enron-related documents. CNN's White House Correspondent Kelly Wallace has that.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT (voice-over): President Bush's advisers called the Justice Departments directive about Enron documents a prudent move that would not cause political problems for Mr. Bush. A senior administration official told CNN, quote, "...any and all papers related to this matter will show everyone in the Bush administration acted in complete accordance with the law..." A point Mr. Bush stressed on Monday.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You know Enron made contributions to a lot of people around Washington D.C. And if they came to this administration looking for help, they didn't find any.

WALLACE: In its letter Friday, the Justice Department asked the White House to hold on to all Enron-related documents, notes and e- mail since January 1999, covering two years of the Clinton administration and the Bush presidency, saying the records, quote, "...may contain information relevant to our investigation."

The directive could complicate the likely court battle between the White House and Congress' investigative arm, the general accounting office. The administration is refusing to turn over information about the work of Vice President Cheney's Energy Task Force, which included meetings with Enron executives. Congress is raising the question, if the White House one day provides that information to federal prosecutors, why wouldn't it turn over the information to law makers?

SEN. DIANNE FEINSTEIN (D) CALIFORNIA: No one is saying the White House did anything wrong. The question is, really, but did Enron try to have undo influence, and was that undo influence transitioned into public policy?

WALLACE: Another pressure on the White House, a Tuesday deadline to tell a federal judge why the vice president has a constitutional right to keep his task force meeting secret. This, in response to a lawsuit filed by a conservative watchdog group.

LARRY KLAYMAN, JUDICIAL WATCH: The American people deserve full disclosure, and that way they'll be able to judge for themselves whether anything untoward was going on between these energy companies and the Bush-Cheney administration.

WALLACE: These developments come as the president has tried to distance himself from the Enron debacle.

(on camera): But that will be hard this week, as Ken Lay, the former Enron chairman, goes before Congress on Monday. A man who was a big contributor to Mr. Bush's political campaigns, but also someone who -- according to Bush advisers -- approached the administration last year for help before his company collapsed and was turned away.

Kelly Wallace, CNN, the White House.

(END VIDEOTAPE)

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com