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CNN Live Sunday
Enron Auditing Firm Destroyed Documents
Aired January 13, 2002 - 17:01 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 LIN, CNN ANCHOR: "TIME" magazine says just days before energy trader Enron made its financial meltdown public, employees of its auditing firm were told to destroy most of their Enron documents. "TIME" says that directive came in a memo to Arthur Andersen employees.
Today Joe Lieberman said if that memo is what it appears, quote, "the folks at Arthur Andersen could be on the other end of an indictment before this is over."
Financial troubles for the energy company have been brewing for some time, but the political fallout could just be beginning. In Washington today White House officials began defending their exchanges with Enron CEO Kenneth Lay.
CNN senior White House correspondent John King has more.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SENOR WHITE HOUSE CORRESPONDENT (voice-over): Top Bush deputies disclose new details of their contacts with Enron officials, but say the bottom line is unchanged: A major political supporter of the president asked for help, and the answer was no.
DON EVANS, COMMERCE SECRETARY: I'm going to do everything I can to protect the integrity and the trust of that office. And my judgment was to protect the integrity of that office, not to step in.
KING: Key Democrats say it is not time for pointing fingers.
SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: I have not seen any evidence up to this time that officials of the Bush administration acted improperly with regard to Enron.
KING: Still, Democrats in Congress want every detail of Enron's dealings with the administration.
Enron chairman and CEO Ken Lay spoke to Commerce Secretary Evans on October 15 of last year, the day before the company disclosed major losses. But Evans says the only topic discussed in that call was Enron operations in India. The Enron chief called Evans again on October 29. And Evans says in that conversation Lay asked for help with bond agencies.
Lay also called Treasury Secretary Paul O'Neill twice: in late October at home, and again at the office in early November.
PAUL O'NEILL, TREASURY SECRETARY: Ken Lay didn't ask me to do anything and we -- you know, we did nothing.
KING: The White House says the president learned of the phone calls just last Thursday, more than two months after the fact. And the president's spokesmen said late last week he did not believe anyone at the White House was told at the time.
But Evans says he told the White House chief of staff a few weeks after the call because Enron's troubles were making headlines.
EVANS: I thought the White House ought to know. I was over there one day, and I stepped into Andy Card's office and told him I received this call. He simply listened to me and said thank you very much.
KING: Thousands of Enron shareholders and employees lost millions when the company filed for bankruptcy. And some Democrats say Secretaries O'Neill and Evans should have warned the public the company was in trouble.
(on camera): But Secretaries Evans and O'Neill say they were not told anything about the company's finances that was not already public knowledge. And they say any investigation in the end will show Enron's generous support of the president, and its connections within the administration, bought it no special treatment.
John King, CNN, the White House.
(END VIDEOTAPE)
LIN: Though news of Enron's troubles is only just beginning to grab attention in Washington, Wall Street has been tracking the company's fall from grace for some time. Enron's stock chart tells that story.
Take a look at this: During the past year, issues of Enron topped out at $83 a share. But as of the market's close on Friday, those same shares were trading at 67 cents a piece.
And as CNNFN's Greg Clarkin reports, many critics are wondering if the Wall Street banking community kept the brewing scandal under wraps.
(BEGIN VIDEOTAPE)
GREG CLARKIN, CNNFN CORRESPONDENT (voice-over): It's already engulfed Houston and Washington, and now the Enron collapse threatens to pull in Wall Street.
A number of Enron critics are asking if Wall Street's bankers played a role in keeping information away from the public as the one- time energy giant collapsed.
WILLIAM LERACH, SECURITIES LITIGATION ATTORNEY: A fraud of this scope and size simply cannot be perpetrated without the assistance of sophisticated professionals. This case is going to continue to evolve and expand. There are other professionals, lawyers, investment bankers and the like, who appear to be deeply implicated.
CLARKIN: The former head of the Securities and Exchange Commission agreed, saying Wall Street bears some of the blame.
ARTHUR LEVITT, FMR. SEC. CHAIRMAN: It's not just he auditors, it's the security analysts; it's the rating agencies that dropped the ball; it's the investment bankers who cooked up the scheme to hide matters from the general public.
CLARKIN: As for the auditors, Arthur Andersen, Enron's accounting firm, has admitted to destroying documents relating to the company. "TIME" magazine reports Andersen employees were direct to destroy all but the most basic, quote, "work papers," end quote.
One member of Congress said, if true, it may lead to criminal charges.
LIEBERMAN: If this memo was what it looks like, I'm afraid that the folks at Arthur Andersen could be on the other end of an indictment before this is over.
CLARKIN: Senator Lieberman also said the Enron disaster could bring down Andersen as well.
LIEBERMAN: Arthur Andersen is a great company with a great name. That name is being sullied; and ultimately this Enron episode may end this company's history.
CLARKIN: Andersen's role has many demanding new oversight of those charged with checking the books of corporate America.
Former SEC Chairman Levitt points out what happened at Enron could happen to other corporate heavyweights.
Greg Clarkin, CNN Financial News, New York.
(END VIDEOTAPE)
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