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CNN Live Sunday

Ken Lay Announces He Will Not Testify Before Congress Tomorrow

Aired February 03, 2002 - 18:01   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.
CATHERINE CALLAWAY, CNN ANCHOR: As we told you just a few moments ago, an appearance before Congress that could have lead to some heated exchanges will not take place tomorrow after all. Former Enron CEO Kenneth Lay is now rejecting that invitation to testify on Capitol Hill. For this late breaking story, we turn to CNN congressional correspondent Jonathan Karl who's joining us by telephone with the very latest -- Jonathan.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Catherine, this was probably the most eager awaited appearance of anybody before a congressional investigatory committee since the heat of the impeachment hearings involving President Clinton. Everything has been set in place as recently as Friday. Ken Lay's attorney's had talked to the committee and said, yes, he plans to come voluntarily and testify, and for the first time answer publicly questions about the collapse of Enron.

But in a letter that came just late today, a letter to the chairman of the Senate Commerce Committee, Ernest Hollings, Mr. Lay's lawyer said that in light of some of the things that he's been hearing members of Congress, including senators on that committee, saying about Mr. Lay and about Enron, that it's clear that it will not be an impartial hearing.

I could read you a couple of quick excerpts from this letter. In one, he says: "These inflammatory statements show that judgments has been reached, and the tenor of the hearing will be prosecutorial." Mr. Lay's attorney goes on to say, you know, says he will not be testifying. He says: "He also wishes to express, as do I, our sincerest apologies for any inconvenience caused by this decision. But he cannot be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard."

Well, this has hit with a giant thud on Capitol Hill. I spoke with one of the senior Democrats on the committee, Byron Dorgan, who said this is a big mistake, because Mr. Lay has been saying for a month now that he would voluntary come before the committee. And now, at this 11th hour, the night before he was supposed to testify, and it's a morning hearing, he's suddenly pulling the plug.

So they're quite upset by this. They don't believe this is the right way to treat Congress, and you can imagine -- although nothing official on this yet -- but you can imagine what will follow very shortly, if not from this committee than from one of the many other committees investigating Enron, there will be subpoenas to follow. Ken Lay had volunteered to testify, so no subpoena has been issued on this, but it's clearly an option that the committees investigating this can go to. They'd certainly want to hear from him, and they've got a lot to ask him.

CALLAWAY: Jonathan, so what's going to happen? Without Mr. Lay, the hearings will continue anyway.

KARL: Well, Senator Dorgan said that a decision we made specifically on this hearing tomorrow morning, this hearing had but one witness, Catherine. This was going to be Ken Lay, the star witness in all of this. And with him not going there, the expectation is that obviously the hearing will not be able to go forward.

And because he had voluntarily accepted this invitation, and it wasn't a subpoena, he doesn't have to come before the committee like we have seen others and get sworn in and take the Fifth Amendment, because he has not yet been subpoenaed. This was simply a voluntary appearance, and he is now voluntarily reneging on this acceptance of that appearance.

CALLAWAY: So you have to wonder, is a subpoena going to follow?

KARL: Yeah, and that's clearly that's the expectation. It's not clear if this committee will be the one to do this subpoena. There is a question of who has subpoena power, but you could be certain that Ken Lay will be subpoenaed.

CALLAWAY: You know, Jonathan, if this is indeed fallout from the Powers report that was released yesterday, you have to wonder, Kenneth Lay knew that report was coming.

KARL: Yeah, and Ken Lay had actually cooperated with that -- with the people that put that report together. So, but the expectation, you know -- when we had first heard about this, rumors started circulating just a couple of hours ago that he wasn't -- that he was going -- that he was getting cold feet, that he wouldn't come before the committee, the expectation was, well, this must have something to do with the Powers report.

But if you look at this two-page letter that he had sent to the committee chairman, Ernest Hollings, he doesn't even talk about the Powers report, but he just cites these examples of things that members of the committee and other members of Congress have said on national television that shows they're biased. I mean, for example, he talks about Republican Senator Peter Fitzgerald, who said on NBC, on "The Today Show", quote: "Ken Lay obviously had to know that this was a giant pyramid scheme, a giant shell game."

So in other words, they're saying people are out there, members of Congress are already out there saying Ken Lay is guilty. Why should he come before the committee to answer questions if the answer is -- the committee thinks they already have the answers?

CALLAWAY: All right, Jonathan. Interesting to see what happens tomorrow morning. I'm sure you'll be keeping in touch with us tonight on this. Jonathan Karl, joining us from Washington. Thanks, Jonathan.

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