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News; Domestic Interview with General Tommy Franks Aaron Brown, John King, Bill Hemmer, Bob Franken, Sheila MacVicar, Jason Be= llini 01/11/2002 CNN: Special Report With Aaron Brown=20 © Copyright eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House,= Inc.). All Rights Reserved.=20 We said last night that the collapse of Enron had been largely underreporte= d. That has now changed, as you will hear tonight, and it is that story, En= ron that begins our whip around the world. We start at the White House and = our Senior White House Correspondent John King. John, a headline from you, = please.=20 JOHN KING, SENIOR WHITE HOUSE CORRESPONDENT: Aaron, because of Enron's poli= tical connections, the nation's top prosecutor, the Attorney General John A= shcroft and his chief of staff, today had to recuse themselves from the gro= wing criminal investigation into the company's bankruptcy. Why? Because Joh= n Ashcroft took a lot of money from Enron and its chief executives.=20 The administration also, for the first time today, acknowledged the Enron C= EO called two cabinet members before the company filed for bankruptcy and a= sked for help. The administration insists it didn't help him and that it di= d nothing wrong. Aaron.=20 BROWN: John, a lot on Enron tonight. We'll be back with you shortly.=20 (COMMERCIAL BREAK)=20 BROWN: Enron exploded today. It's been a while since the energy company, th= e trading company, a Fortune 500 giant went bankrupt, costing investors inc= luding the company's employees billions of dollars.=20 The story has simmered around for a while, overwhelmed by the war, waiting = its time in the way a good story does, and the time has finally come. Last = night, we reported the Justice Department was opening a criminal investigat= ion, and today the case took a political turn as well, a turn that could we= ll be the first real threat to the Bush Administration.=20 Developments to report, lots of them. We go back to the White House and Sen= ior White House Correspondent John King. John, good evening.=20 KING: Good evening to you, Aaron. A complicated story anyway because of the= facts, even more so because of the politics. If you brought together senio= r officials in the Bush Administration and said, everyone with ties to Enro= n raise your hands, a lot of hands would go up.=20 The President knows the CEO quite well. He's an old family friend. So does = the Vice President and his Chief of Staff. The President's top political ad= viser is close to Enron, so is his top economic adviser. Several members of= the cabinet too. The White House insists though, there has been no questio= nable behavior. There are though, a lot of questions.=20 (BEGIN VIDEOTAPE)=20 KING (voice over): Attorney General John Ashcroft is recusing himself from = the criminal investigation of Enron, as is his Chief of Staff. The reason, = $60,000 in political contributions from Enron and its top executives in Cam= paign 2000, when Ashcroft was running for reelection to the Senate.=20 Another reflection of the political stakes in the Oval Office, the Presiden= t himself announcing two new cabinet level reviews to determine if the gove= rnment needs stronger disclosure laws to protect shareholders and investors= in 401 (k) and other retirement plans.=20 GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I have great concern for th= e stories, for those I read about in the stories who put their life savings= aside and for whatever reason, based upon some rule or regulation, got tra= pped in this awful bankruptcy and have lost life savings.=20 KING: Energy giant, Enron, first gave a public hint of its financial troubl= es last October, and then filed for bankruptcy in early December, a major e= conomic story in any event and a major political story too because Enron an= d its CEO, Ken Lay, have deep connections to the Bush family and in both po= litical parties in Congress.=20 BUSH: I have never discussed with Mr. Lay the financial problems of the com= pany.=20 KING: But Lay did alert top Bush deputies that Enron was in trouble, and as= ked for help well before the December bankruptcy filing. He called Treasury= Secretary Paul O'Neill, and Commerce Secretary Don Evans, in late October = and O'Neill a second time in early November.=20 Sources say Lay wanted help shoring up the company's bond rating. Aides say= Secretaries O'Neill and Evans decided there was nothing the government cou= ld or should do. The White House says they did not pass the news on to the = President or any other senior administration officials.=20 ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The President is pleased with t= he actions that his cabinet secretaries took. He thinks they acted wisely a= nd properly.=20 Lay is an old Bush family friend, and he and his company a major donor to b= oth political parties. In the 2000 campaign cycle alone, Enron and its exec= utives contributed more than $2.2 million to federal candidates and politic= al committees; $74,000 went to the Bush Campaign; $1.5 million to other Rep= ublican campaigns and committees; and $640,000 to the Democrats.=20 Four Congressional committees are also investigating Enron, and Democrats w= ant more information on the company's contacts with the Bush White House.= =20 (END VIDEOTAPE)=20 KING (on camera): In hindsight, and there is always hindsight it seems in s= uch cases, top Bush Administration officials say yes, they wish word of tho= se contacts between Ken Lay, the Enron CEO, and Bush cabinet secretaries ca= me out sooner, but they say in the end, any investigation will show this, t= hat a top Bush fundraiser asked for help and was told no, and that this Pre= sident now is showing no hesitancy at all in investigating a man who's not = only a top political supporter, but a long-time family friend. Aaron.=20 BROWN: You could almost hear Democrats smacking their lips a little bit on = this one. Was the White House, in the briefings today and around the buildi= ng, defensive about this or did they seem, people seem comfortable that the= y're OK?=20 KING: Quite defensive about it, Aaron. Some phone calls after the White Hou= se briefing by officials saying, why so many questions about this? This is = an administration of unquestioned integrity. Why do you want to know all th= ese things?=20 But they also understand now, many Democrats in the Congress saw the invest= igations of the Clinton Administration, subpoenas for documents in cases th= at the Clintons thought were way out of bounds, no questions should be aske= d. The Democrats will ask questions about this. So will reporters.=20 The Bush Administration I think got the message today that they have to be = quicker and more forthcoming in releasing any, any details at all of consul= tations or conversations with this company. Again, they say in the end, the= y will be proven that the President did nothing wrong, and that in fact, hi= s two cabinet secretaries, one Don Evans a very close friend of Ken Lay, sa= id no when this man asked for help.=20 BROWN: And just one other quick thing, the decision to have a White House -= - are these White House investigations into Enron, or White House discussio= ns about disclosure laws dealing with investments and investors generally?= =20 KING: There are a number of investigations, so it gets confusing. The Justi= ce Department, even though the Attorney General and the U.S. Attorney and m= ost of his staff in Houston, have recused themselves because of political r= elationships or other relationships. The Justice Department is having a cri= minal investigation.=20 The Labor Department oversees pensions. It has a separate investigation int= o the pension programs. Now there will be two cabinet level taskforces head= ed by the Treasury Department, that involve other departments including the= Securities and Exchange Commission, to see if the government did something= wrong here, if you will, if there should be stronger rules that require an= Enron, when its finances are going south, to tell its shareholders and esp= ecially to tell its employees who have so much stock in those 401 (k) plans= . All the Enron executives who knew about this sold their stock. The employ= ees lost their life savings. The President wants to know if the government = needs to make sure that doesn't happen again.=20 BROWN: John, the old wire service reported that you are -- you probably wan= t to chase the fire that's going on somewhere in D.C.=20 KING: We get those out here.=20 BROWN: Yes, thank you for your work tonight. Senior White House Corresponde= nt John King. We said that the Enron collapse is both a political story and= a business story. It's a complicated story to be sure. Tonight, we're join= ed by someone who can help us understand both the business and the politics= of this. Jim Glassman writes a weekly Washington Post investment column. H= e's also a Fellow at the American Enterprise Institute. He joins us tonight= from New York. Jim, good evening.=20 JAMES GLASSMAN, HOST, TECHCENTRALSTATION.COM: Good evening, Aaron.=20 BROWN: How could so many -- I mean if you looked at all of the mutual funds= and all the investment houses that recommended Enron, the stock price shot= way up. It looked like a terrific company. How could so many smart people = have been so dumb?=20 GLASSMAN: They didn't just recommend it, they owned it. I mean companies li= ke Janus, Fidelity. There are a lot of analysts that have conflicts of inte= rest, but many of them, who did not, really praised this company to the sky= . Fortune named it six years in a row, the most innovative company in Ameri= ca.=20 Basically, what was going on was that Enron was deceiving investors, deceiv= ing analysts, overstating the profits it was making, hiding some of the loa= ns that it had taken out, and as soon as this was found out, the company ba= sically got capital punishment, which in my opinion it deserved. And I thin= k it's a good lesson to other companies not to deceive investors.=20 Now, the question of whether it did something illegal or not, is another ma= tter. Just the fact that it was very clearly trying to say that it was in m= uch better shape than it was. Unfortunately, a lot of little people got hur= t.=20 BROWN: I want to talk about that, but are you telling me that a company can= mislead investors, mislead the public about how much money it's actually m= aking or how much debt it actually has, and that is not in and of itself a = crime?=20 GLASSMAN: Well, what Enron was doing specifically about the debt was, it wa= s reporting that it had $14 billion in debt. It really had about three time= s that much, and the other debt was pushed off onto other related entities,= and it was very, very difficult for any analyst or the public to find out = about it.=20 Now, it's very difficult to pass enough accounting rules to take care of ev= ery shenanigan that a company's going to come up with. What you need is a m= arket and investors who will crack down really, really hard on companies th= at are being deceptive, if not dishonest, and that's what's happened in thi= s case. But yes, it's not hard to hide things. It's not hard at all to hide= things.=20 BROWN: That's comforting to know for those of us who have money in the mark= et.=20 GLASSMAN: But you know, Aaron, really the way to prevent yourself from gett= ing burned is by being diversified. Things are going to happen like Enron, = and there have been other cases. There are not that many of them, but there= are other cases. And if you have a huge chunk of your retirement savings i= n one company, this kind of thing can happen, a company that looks good in = all of its aspects and bang, it turns out that it's not on the level.=20 BROWN: But that's exactly what happened to the employees, that their 401 (k= ) money --=20 GLASSMAN: Yes. Yes.=20 BROWN: -- was going into the company and worse, they were not allowed to se= ll it.=20 GLASSMAN: Yes, and I think that's a much more serious problem, and that's w= hat some of the policymakers in Washington are looking into, and I think th= ere's a lesson for your viewers. You know, most companies make it easy for = you, as an employee, to buy corporate stock and the problem that you get in= to is that if you lose your job, not only have you lost your everyday livel= ihood, but you also may have lost a big chunk of your retirement savings if= your company goes out of business, as Enron did.=20 The lock-in, the fact that employees could not sell their stock for a certa= in period, was not good, and the fact that apparently executives had access= to information that employees did not was also not good.=20 BROWN: Jim, next time, and I expect there's going to be one, we need to tal= k about the politics of this. Thanks for joining us tonight.=20 GLASSMAN: Love to do that. Thank you, Aaron.=20 BROWN: Thank you, sir.=20 GLASSMAN: OK.=20 BROWN: Jim Glassman in New York. When we return, gunfire at the Kandahar Ai= rport and more. NEWSNIGHT from Atlanta continues in a moment. .............= ...........................................................................= .............................................=20 USA: Enron's Lay called Greenspan in October. 01/11/2002 Reuters English News Service=20 (C) Reuters Limited 2002.=20 WASHINGTON, Jan 11 (Reuters) - Enron Corp.'s Chairman Kenneth Lay telephone= d Federal Reserve Chairman Alan Greenspan on Oct. 26, a Fed spokesman confi= rmed on Friday.=20 The spokesman would not say what was discussed during the conversation but = he did say that Greenspan did not follow up the call with any action. "He did nothing in response to the call. It would have been inappropriate,"= the spokesman said.=20 The White House has said Lay called U.S. Treasury Secretary Paul O'Neill an= d Commerce Secretary Don Evans in the autumn. The White House said the two = officials opted to do nothing about their calls.=20 The Justice Department on Wednesday announced it had opened a criminal inve= stigation into the energy trading company, whose December bankruptcy threw = thousands out of work, devastated investors and wiped out the pension plans= of many employees when its stock price plunged. ...........................................................................= ..........................................................=20 Trading of Enron shares halted; judge delays announcement on auction proces= s By ALAN CLENDENNING AP Business Writer 01/11/2002 Associated Press Newswires=20 Copyright 2002. The Associated Press. All Rights Reserved.=20 NEW YORK (AP) - Beleaguered Enron Corp. planned to select one of two suitor= s to buy its wholesale energy trading operation in an auction expected to e= nd late Friday morning, a source familiar with the situation said.=20 The auction was being held in private and the selection of a buyer was expe= cted to be announced at a bankruptcy court hearing that was originally sche= duled for 10 a.m., but was delayed until noon. Trading in Enron shares was delayed Friday morning on the New York Stock Ex= change as negotiations for a sale continued pending an anticipated announce= ment.=20 Enron said late Thursday that negotiations for a sale were continuing throu= gh the night.=20 The source, who spoke on condition of anonymity, said early Friday that the= talks were continuing and the field had been narrowed to two, but declined= to name the suitors. Investment banks that reportedly have an interest in = buying into Enron include Citigroup Inc. and UBS Warburg.=20 In a related matter, Judge Arthur Gonzalez said he expected to rule Friday = on a request to transfer the bankruptcy case to Houston.=20 Gonzalez will have the final word Friday on any sale that takes place as a = result of the auction. More than a dozen Enron creditors have filed objecti= ons to the sale, essentially because they want a better explanation of how = the proceeds will be divvied up.=20 Dissatisfied creditors will have 10 days to appeal Gonzalez's ruling.=20 Before its collapse late last year, Enron was the world's largest energy me= rchant, accounting for roughly 25 percent of all trades in a market it help= ed pioneer. Enron differed from competitors in its penchant for complex bet= s on everything under the sun - advertising space, broadband, paper, the we= ather and more than 1,000 other products. ...........................................................................= ..........................................................=20 Widening probe of Texas-based Enron could dog Bush as Whitewater plagued Cl= inton By TOM RAUM Associated Press Writer 01/11/2002 Associated Press Newswires=20 Copyright 2002. The Associated Press. All Rights Reserved.=20 WASHINGTON (AP) - The expanding investigation into the collapse of Enron Co= rp. and the company's close ties to the Bush administration could quickly t= urn into a consuming political liability for President George W. Bush in sp= ite of his currently high approval ratings. And Democrats are pressing hard= for just that.=20 At this point, no one is alleging wrongdoing by Bush or top members of his = administration in the bankruptcy of the Houston-based energy trading compan= y, a failure that cost thousands of jobs and ravaged the retirement savings= of many employees. But such investigations tend to take on a life of their own. And Democrats,= sensing a congressional election-year opportunity, are working hard to tur= n up the heat.=20 Some Democrats are likening the probe to the Whitewater and campaign fund-r= aising investigations that plagued former President Bill Clinton.=20 "The reason this is so potentially devastating to Bush is that it brings to= life in very real terms the notion that when push comes to shove, he's for= the big business special interests and not for the little guy," said forme= r Clinton press secretary Joe Lockhart.=20 The controversy deepened on Thursday with the disclosure by the White House= that Enron Chairman Kenneth L. Lay, a longtime friend of the president, ca= lled two of Bush's Cabinet officers - Treasury Secretary Paul O'Neill and C= ommerce Secretary Don Evans - before the company filed for bankruptcy late = last year.=20 The disclosure came a day after the Justice Department announced it was ope= ning a criminal investigation of the energy company's collapse, including w= hether it defrauded investors by deliberately concealing information about = its finances.=20 Attorney General John Ashcroft, who received campaign contributions from En= ron executives during his failed 2000 senatorial bid, stepped aside from th= e investigation.=20 The collapse, the largest corporate bankruptcy ever, is also being probed b= y the Labor Department and by the Securities and Exchange Commission, which= is looking into the company's destruction of possibly key financial docume= nts; and by five congressional committees.=20 Sen. Joseph Lieberman, leading one of those inquiries, is promising "a sear= ch for the truth, not a witch hunt."=20 But some Republicans - including White House spokesman Ari Fleischer - used= just that term, "witch hunt," on Thursday in describing the widening inves= tigation.=20 "There's not even smoke here, let alone a fire," said Charles Black, a vete= ran Republican consultant.=20 "They can keep it going in terms of probing Enron, looking into what happen= ed to those people who lost their pensions, what happened to the accounting= . All those are legitimate issues," said Black. "But there's no evidence th= at any elected officials did anything for Enron."=20 Bush, a former Texas oilman himself, on Thursday told reporters, "I have ne= ver discussed with Mr. Lay the financial problems of the company." And Flei= scher said that no one in the administration offered to intervene on Enron'= s behalf.=20 "This is hardly going to be a scandal that brings down President Bush, but = it will be a nagging problem for the Bush administration for some time to c= ome," said Larry Sabato, a University of Virginia political scientist.=20 But Sabato said it has all the ingredients to become all-consuming "because= the Bush administration is so laden with corporate types and people with t= ies to the energy industry. It's understandable to the American people. It'= s the big boys versus the little guys who got hurt."=20 "These things can be an enormous distraction. But by the end of the Clinton= administration, we learned that the best thing to do is assign a team to d= isclose everything, and to keep everyone else out of it," said Paul Begala,= a former Clinton political adviser.=20 Lanny Davis, who was special counsel to Clinton from 1996 to 1998, urged De= mocrats to not take the same low road he claims Republicans took in pursuin= g the Whitewater and related inquiries.=20 He said so far he sees nothing in the Enron case to link Bush administratio= n officials to the collapse other than innuendo. "Let's go after the seriou= s stuff," including why Enron employees were prevented from unloading their= Enron stock in their company-managed retirement plans as the share prices = plunged from over dlrs 80 to under dlrs 1, Davis said.=20 ---=20 EDITOR'S NOTE - Tom Raum has covered national and international affairs for= The Associated Press since 1973. ...........................................................................= ..........................................................=20 Judge To Announce Enron Change Of Venue Motion Later Fri By Kathy Chu 01/11/2002 Dow Jones News Service=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 Of DOW JONES NEWSWIRES=20 NEW YORK -(Dow Jones)- A federal bankruptcy judge here delayed a much-await= ed hearing on Enron Corp.'s (ENE) motion to sell some of its energy-trading= assets until noon Friday - signaling that the company may still be working= to cement a last-minute deal with bidders. The hearing, before Judge Arthur J. Gonzalez in the bankruptcy court of the= Southern District of New York, was originally scheduled for 10 a.m. EST.= =20 The judge said he plans later in the day to decide upon a motion by some of= Enron's creditors to transfer the bankruptcy case to Houston, where the co= mpany is headquartered.=20 -By Kathy Chu; Dow Jones Newswires; 201-938-5394 ...........................................................................= ..........................................................=20 USA: Enron slated to decide today on trading unit bidder. 01/11/2002 Reuters English News Service=20 (C) Reuters Limited 2002.=20 NEW YORK, Jan 11 (Reuters) - Enron Corp. said it aims to make a decision by= 11:00 a.m. EST (1600 GMT) on which company was the successful bidder for i= ts trading operations.=20 Martin Bienenstock, an Enron attorney, said Enron is still choosing between= two bidders to take control of Enron's trading operations. He didn't name = the companies. A decision is expected to be presented for approval to U.S. = Bankruptcy Court Judge Arthur Gonzalez at a morning hearing in New York, he= said. Citigroup and UBS Warburg have been in the running to buy up to 51 percent = of Enron's energy trading unit, which was put up for auction this week afte= r the Houston-based energy trader declared bankruptcy Dec. 2. London based = oil company BP said it was also interested in some parts of the unit.=20 "I suspect we will have a decision by 11:00 a.m., but the auction is contin= uing," said Bienenstock in an interview. Negotiators worked late into the n= ight on Thursday to haggle the best possible offer for the trading operatio= ns, Enron said. ...........................................................................= ..........................................................=20 USA: Enron shares halted for news pending. 01/11/2002 Reuters English News Service=20 (C) Reuters Limited 2002.=20 NEW YORK, Jan 11 (Reuters) - Trading in shares of troubled energy giant Enr= on Corp. was halted early on Friday on the New York Stock Exchange and over= -the-counter.=20 Enron stock was halted for news pending at 67 cents per share on the NYSE a= s well as over the counter. Enron, once the dominant energy trader in North America, declared bankruptc= y after admissions of murky dealings in early December, which all but close= d down trading operations.=20 In recent developments, Arthur Andersen, Enron's accounting firm, has said = it destroyed papers relating to Enron's finances.=20 Enron's chairman, Ken Lay, also was said to have approached two top Bush ad= ministration officials before filing for bankruptcy. ...........................................................................= ..........................................................=20 Enron Fall Renews Interest In Electricity Clearinghouse By Kristen McNamara 01/11/2002 Dow Jones Energy Service=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 Of DOW JONES NEWSWIRES=20 NEW YORK -(Dow Jones)- Energy companies' increased concern about exposure t= o their trading partners following the meltdown of former energy giant Enro= n Corp. (ENE) has renewed interest in the development of clearinghouses for= the North American electricity markets. It's long been thought that the continent's power markets could benefit fro= m a formal clearing function, in which a central institution extends financ= ial guarantees on trades. Impediments that frustrated past efforts remain, = but Enron's rapid collapse and the tighter credit standards faced by the re= st of the industry have given clearinghouse backers new ammunition.=20 "The idea was already in people's heads that it was something good to have,= " said Jim Walker, senior analyst at Forrester Research Inc., a technology = research firm in Cambridge, Mass. "The Enron situation made people think we= need to get it faster."=20 Enron, formerly the largest wholesale trader of electricity and natural gas= , filed for bankruptcy protection Dec. 2. The former titan's fall stunned t= he industry and led to increased scrutiny of power companies' credit by rat= ings agencies and trading partners.=20 The U.S. power markets - which Forrester Research estimates traded $446 bil= lion worth of wholesale electricity in 2001 - lack a central exchange. Most= power is traded over the counter, with companies contacting each other dir= ectly and left on the hook if their counterparty defaults.=20 A clearinghouse would protect against counterparty default and reduce the a= mount of collateral companies must post to back their trades, analysts said= . Under such a system, the clearinghouse sets margin requirements and acts = as counterparty to every trade. It collects fees and in return steps in to = cover defaults.=20 A number of energy companies, including Sempra Energy (SRE), Williams Cos. = (WMB), Mirant Corp. (MIR) and Consolidated Edison Inc. (ED) said they welco= me the idea.=20 "We certainly support that idea and think it would be beneficial and would = go a long way toward helping to manage the credit risk of the counterpartie= s," Sempra spokesman Doug Kline said.=20 Clearing For Takeoff=20 Anticipating increased demand for insulation against trading risk, several = organizations plan to roll out clearing services for electricity markets th= is year.=20 The New York Mercantile Exchange, the world's largest energy marketplace, h= opes to offer clearing services to power traders sometime in 2002, spokeswo= man Nachamah Jacobovits said. Nymex began extending clearing services to th= e over-the-counter markets for natural gas products in November.=20 "We have accelerated because of the Enron problems," Jacobovits said.=20 IntercontinentalExchange, a fast-growing Internet-based marketplace backed = by a number of leading energy companies and banks, is also exploring the po= ssibility of expanding its clearing function to include electricity, Senior= Vice President David Goone said.=20 "There's tremendous demand to start coming up with a clearing solution for = the electricity marketplace," Goone said. "Clearing would allow more partic= ipants to trade."=20 Because the exchange is still hammering out the details, Goone wouldn't say= which electricity products might be covered or when clearing services woul= d be in place.=20 ICE, which last year bought London's International Petroleum Exchange, the = world's second-largest energy futures exchange, has an agreement with the L= ondon Clearing House to provide clearing services for natural gas and crude= oil trades done on ICE beginning in the first quarter of 2002.=20 A third company called EnergyClear, based in Houston, plans to launch a cle= aringhouse for electricity and natural gas in the next three to six months,= according to Jimmy Wright, senior vice president of business development.= =20 Energy companies will own and govern the clearinghouse itself. The Bank of = New York (BK) and brokers Prebon Yamane and Amerex own a unit that will ope= rate the clearinghouse.=20 EnergyClear has the technology and regulatory approval to clear trades, but= must get its membership and governing rules in place before it can begin o= perating, Wright said. The effort was stalled as energy companies shifted t= heir attention to sorting out their exposure to Enron, Wright said.=20 "We lost probably weeks or a month, if not more, of productive time," he sa= id.=20 The Hard Part=20 Despite the support, analysts said it's difficult to estimate how much busi= ness a clearinghouse could actually do. Developing a clearing function for = electricity will be more complicated than for other commodities because of = the volatility of power prices and the Balkanized nature of the electricity= markets - with rules, products and liquidity varying from region to region= , energy experts said.=20 Nymex tried and failed to create a market for electricity futures - standar= d products traded on a regulated exchange with clearing and settlement serv= ices. Electricity futures failed to catch on with energy companies as a ris= k-management tool, in part because there isn't a national benchmark to use = as reference point.=20 "As liquidity develops in highly traded benchmark products, they will want = to have a clearinghouse for those products," Walker said.=20 Thus far, companies have been reluctant to pay for clearing services in the= electricity markets, said Ken Nichols, president of NexClear Inc. NexClear= spent two years trying to develop an electricity-market clearinghouse, but= gave up last summer when it couldn't secure enough money to start up.=20 "The willingness to pay has not been there," Nichols said. "How many more e= xamples does the industry need to realize the cost of mitigating credit ris= k?"=20 A standard set of rules governing the trading operations of each region mig= ht be necessary before a clearinghouse could begin operating, said Joseph O= ates, vice president for energy management, at Consolidated Edison Co.=20 Federal energy regulators are pushing utilities and grid operators to devel= op uniform regional markets with standard rules. It's not clear how quickly= these could be up and running. But the independent power-grid managers aro= und the country generally offer clearing and settlement services in the mar= kets they operate, and those could be expanded as the so-called independent= system operators and regional transmission organizations grow.=20 "It is these ISOs, these RTOs that are right in the middle of these markets= and probably need to take on the function of not just being the traffic co= p in these markets but also the referee and auctioneer that makes these mar= kets work," Larry Makovich, senior director for electric power research at = the Cambridge Energy Research Associates said.=20 -By Kristen McNamara, Dow Jones Newswires; 201-938-2061; kristen.mcnamara@d= owjones.com=20 (Jon Kamp in Chicago contributed to this article.) ...........................................................................= ..........................................................=20 WHITE HOUSE WATCH: Enron Story Heats Up At White House 01/11/2002 Dow Jones International News=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 (This article was originally published Thursday)=20 By Alex Keto=20 A Dow Jones Newswires Analysis=20 WASHINGTON -(Dow Jones)- The long-simmering story over the collapse of Enro= n (ENE) and its political contributions to President George W. Bush heated = up considerably Thursday with the revelation that Enron Chairman Kenneth La= y pleaded for help from the administration while his company was going down= in flames. Administration officials turned Lay down, but the news brings the issues of= political contributions and political favors into uncomfortably close prox= imity.=20 For his part, Bush said he was out of the loop.=20 "I have never discussed with Mr. Lay the financial problems of the company.= The last time that I saw Mr. Lay was at my mother's fund-raising event for= literacy in Houston. That would have been last spring," Bush said.=20 Bush went on to say he wants to see a full investigation into Enron's bankr= uptcy, the largest in U.S. history.=20 "What anybody's going to find out is that this administration will fully in= vestigate issues such as the Enron bankruptcy, to make sure we can learn fr= om the past and make sure workers are protected," Bush said.=20 Nevertheless, the White House appeared to be buffeted by fast-moving events= with White House spokesman Ari Fleischer denying at midday there was any c= onflict of interest in having Attorney General John Ashcroft, who received = political contributions from Enron as a Senate candidate, oversee a crimina= l probe of the company's bankruptcy. Less then two hours later, Ashcroft an= d a top aide recused themselves from the investigation.=20 Shortly after the Ashcroft announcement, Arthur Andersen LLP, the company t= hat served as Enron's auditors, announced that a "significant" number of th= e company's documents and records had been destroyed. Both federal and cong= ressional investigators have been seeking the documents.=20 Fleischer said that during the autumn Lay called Treasury Secretary Paul O'= Neill to warn him that Enron was on the verge of collapse, and Lay said the= bankruptcy of his company could be as destabilizing as the implosion of th= e Long-Term Capital Management hedge fund in the late 1990s.=20 However, upon investigation, the Treasury Department rejected Lay's argumen= ts.=20 Later, Lay called Commerce Secretary Don Evans to say "he (Lay) was having = problems with his bond rating and he was worried about its impact on the en= ergy sector."=20 Evans then called O'Neill but "they both agreed no action should be taken t= o intervene with their bond holders," Fleischer said.=20 Even before the latest revelations, the White House had confirmed Vice Pres= ident Dick Cheney or his aides met with Enron officials six times last year= to discuss energy issues while the White House was drawing up its energy p= lan .=20 However, Fleischer said the fact that Lay and others were talking to top of= ficials isn't in and of itself a crime.=20 "I want to remind you that communication is not a wrongdoing. What took pla= ce here was, they received phone calls and took no action. The charge has b= een, did the government take any action? And the answer from these two offi= cials is no," Fleischer said.=20 "I think it should surprise no one that people in the administration receiv= e phone calls from people who are either in business or at unions. It happe= ns everyday," Fleischer said.=20 However, some of Fleischer's assertions were, to be blunt, surprising.=20 To begin with, Fleischer said Thursday morning was the first time that O'Ne= ill and Evans mentioned to Bush they had been in contact with Lay in the we= eks just ahead of the company's bankruptcy.=20 In addition, Fleischer said no one in the administration briefed Bush about= Enron's woes and he was hard pressed to say how the president learned the = company had gone belly up late last year.=20 "He learned last fall. And I couldn't tell you if he learned as a result of= the media accounts when everybody wrote that Enron had gone bankrupt or th= rough any other mechanism. He learned last fall," Bush said.=20 However, this explanation appeared to be rather thin considering that Bush = was fully informed and deeply involved in the financial bailout of the nati= on's airlines at the same time in part because thousands of jobs were at ri= sk. Enron employed 20,000 workers.=20 Asked if, in hindsight, the president wished he had been better informed of= the developments at Enron and among his top officials, Fleischer said, "No= ."=20 Adding to the White House's discomfort is the fact that Democrats on Capito= l Hill are gearing up for hearings on Enron. Fleischer warned them against = going too far.=20 "It's appropriate to take a look into what led to the bankruptcy of Enron a= nd whether or not anything was done wrong in the process of Enron going ban= krupt. But if that's a politically charged, a politically motivated effort,= then I think the American people are going to say that this is just anothe= r fishing expedition, another endless investigation, the type that they sou= red on over the last many years," Fleischer said.=20 Bush Warns Iran Not To Shelter Fleeing Al-Qaida=20 Following reports that Iran may be sheltering small numbers of fleeing al-Q= aida or Taliban fighters and trying to control Afghanistan's western provin= ces, Bush bluntly warned Tehran it will be held accountable for any moves t= o terrorism or terrorists.=20 "Any nation that thwarts our ability to rout terror out where it exists wil= l be held to account one way or the other," Bush said.=20 "We had some positive signals early - early in this war from - from the Ira= nians. We would hope that they would continue to be a positive force in hel= ping us bring people to justice. We would hope, for example, they wouldn't = allow al-Qaida murderers to hide in their country. We would hope that if th= at be the case, if someone tries to flee into Iran, that they would hand th= em over to us," Bush added,=20 Bush also told Tehran to keep its hands off of Afghanistan's fragile govern= ment and hinted the U.S. response could be sharp.=20 "If they, in any way, shape or form, try to destabilize the government, the= coalition will be - will deal with them in, you know, in diplomatic ways, = initially," Bush said.=20 For what its worth, Iran denied it was either undercutting the Kabul govern= ment or hiding terrorists.=20 "It has been our policy not to allow terrorist groups such as al-Qaida in I= ran," Vice President Mohammad Ali Abtahi told The Associated Press.=20 The U.S. has long considered Iran a major backer of international terrorism= .=20 Certainly, Abtahi's comments didn't sway Secretary of Defense Donald Rumsfe= ld.=20 "We know that (Afghanistan-Iran) has a porous border and we know people hav= e moved back and forth throughout history. And we also know they've been mo= ving back and forth in recent history," Rumsfeld said.=20 -By Alex Keto, Dow Jones Newswires; 202-862-9256; Alex.Keto@Dowjones.com ...........................................................................= ..........................................................=20 POINT OF VIEW: A New Champion For Disclosure: Bush 01/11/2002 Dow Jones News Service=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 (This article was originally published Thursday.)=20 By Neal Lipschutz=20 A Dow Jones Newswires Column=20 NEW YORK -(Dow Jones)- Corporate disclosure found a high-profile champion T= hursday: the president of the United States. It's not often that the chief executive of the world's most powerful nation= concerns himself with issues such as what public companies should have to = tell investors. That's what cabinet officers and federal agency heads are f= or.=20 But President George W. Bush was provoked Thursday to announce the creation= of a high-level working group to study disclosure rules to see if they nee= d to be improved.=20 The reason for this comes down to one word: Enron.=20 In light of the Chapter 11 filing by former high-flying Enron Corp., Bush s= aid Thursday that he was forming a working group consisting of representati= ves of the Treasury, the Federal Reserve, the Securities and Exchange Commi= ssion and the Commodity Futures Trading Commission to review disclosure rul= es, Dow Jones Newswires reported.=20 Many of Enron's woes stemmed from lightly reported off-balance-sheet transa= ctions. Now, it's unlikely that the SEC needs the help of all these other agencies=20 to get the job done. It embarked, pre-Enron, on a broad effort to improve and make "current" corporate disclosure of material developments. This might be a case of too many cooks.=20 But it still has to be counted as a silver lining of the Enron mess that a = better disclosure regime will now get the crisis-induced impetus often need= ed to create real change.=20 Assuming this working group brings back a plan that really will make compan= ies disclose more of their pertinent financials in a timely and understanda= ble way, Bush will have no choice but to back it.=20 After all, he formed the working group. And it's in his political interest,= given his and the administration's relationship with Enron's leaders, to b= ack some regulatory lessons from the company's downfall and impose a more t= ransparent regimen of accounting.=20 For its part, the SEC, under Chairman Harvey L. Pitt, should tell its colle= agues at the other agencies joining the working group that it already has a= plan. The SEC then needs to flesh it out in an appropriate way and win the= backing of the other agencies.=20 Enron's failure is an opportunity to overcome the business-as-usual objecti= ons that are bound to rise from a proposal that would significantly alter a= nd improve the way companies report important developments to investors.=20 Notwithstanding the bureaucratic drag of a working group, the support of a = popular president for such a usually obscure effort has got to be a big plu= s in getting something done.=20 Neal Lipschutz is senior editor, Americas, for Dow Jones Newswires.=20 -By Neal Lipschutz, Dow Jones Newswires, 201 938 5152=20 neal.lipschutz@dowjones.com ...........................................................................= ..........................................................=20 Enron Confirms CEO Lay Made Calls To Top Govt Officials By Christina Cheddar 01/11/2002 Dow Jones News Service=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 Of DOW JONES NEWSWIRES=20 (This report was originally published Thursday.)=20 NEW YORK -(Dow Jones)- Enron Corp. (ENE) Thursday confirmed its chairman an= d chief executive, Kenneth Lay, contacted top Bush administration officials= to warn that bankruptcy was a possibility for the Houston energy trader. Earlier Thursday, White House officials said Lay contacted Treasury Secreta= ry Paul O'Neill and Commerce Secretary Don Evans prior to the company's ban= kruptcy filing in early December.=20 "Lay made phone calls to tell senior government officials about the situati= on at Enron," an Enron spokesman said. "He told them that we were working t= o avoid bankruptcy, but it couldn't be ruled out. He didn't ask for anythin= g. He was giving information."=20 According to the spokesman, Lay thought the officials needed to know of the= looming threat of bankruptcy because Enron was one of the nation's leading= companies and was heavily involved in national energy markets.=20 Lay wanted them to know so they could "do anything they needed to," the spo= kesman said, adding that he didn't know when the calls were made.=20 Enron and Lay have been leading contributors to the President George W. Bus= h, as well as to a long list of Democratic and Republican candidates.=20 When asked if Lay had a personal connection to either Evans or O'Neill, the= spokesman said he "had no idea."=20 Prior to his appointment as Commerce Secretary, Evans served as chief execu= tive of Tom Brown Inc. (TMBR), a Denver natural gas company. A longtime fri= end of Bush, Evans also served as general chairman of his presidential camp= aign.=20 Meanwhile, O'Neill headed Alcoa Inc. (AA), a Pittsburgh aluminum company, p= rior to his appointment.=20 Bush Thursday called for two working groups from his cabinet and other agen= cies to review matters related to events at Enron. The investigations would= be in addition to the criminal investigation launched by the Department of= Justice.=20 One group, from the Labor, Commerce and Treasury Departments, will look int= o Enron's pension rules and regulations. Another group, drawing from the Tr= easury Department, the Federal Reserve, the Securities and Exchange Commiss= ion, and the Commodities Futures and Trading Commission, will investigate c= orporate disclosure rules and regulations.=20 -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar= @dowjones.com ...........................................................................= ..........................................................=20 US O'Neill Focuses On Regulatory Reform In Enron Review 01/11/2002 Dow Jones Capital Markets Report=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 (This article was originally published Thursday)=20 NEW YORK -(Dow Jones)- U.S. Treasury Secretary Paul O'Neill said Thursday t= hat he would focus on regulatory reform as part of President George W. Bush= 's newly announced probe of Enron Co. (ENE). O'Neill told Fox News Channel that he would be part of two task forces stem= ming from the issue.=20 In the first, he would join Commerce Secretary Don Evans and Labor Secretar= y Elaine Chao to look at the impact of recent corporate bankruptcies on pen= sion benefits.=20 In the second, he would join Federal Reserve Chairman Alan Greenspan, Commo= dities Futures and Trading Commission Chairman James E. Newsome and Securit= ies and Exchange Chairman Harvey Pitt in looking into disclosure rules. O'N= eill said they will determine whether changes are needed "to assure that in= vestors and markets have all the information they are entitled to have to m= ake our free-market economy work properly."=20 In ordering the probe, Bush particularly pointed at the loss of pension ben= efits by employees at Enron, which filed for bankruptcy last month. As Enro= n's stock collapsed, employees were barred from selling the company's share= s while the energy trading company was changing pension administrators and = the accounts were frozen.=20 Asked for specific solutions, O'Neill suggested that the government needed = to see if 401(k) and other pension accounts need to be locked up when new a= dministrators come in.=20 "We need to look at that and see if that is a sensible thing to do," he sai= d.=20 But beyond that, the Treasury secretary refused to be pinned down on possib= le remedies. "I think we need to do a study and we need to do analysis," he= said.=20 "We need to do analysis before we do prescription. It's a pretty good idea = to figure out what disease exists before we start cutting off arms and legs= ," he added.=20 O'Neill also stressed that this effort is motivated by Bush's concern for E= nron's employees. The Treasury secretary said the president is "just hurtin= g a lot for people who apparently accumulated all of their savings in a 401= (k) plan and then lost it all in a couple of months." -By Paul Rekoff, Dow = Jones Newswires; 201-938-4370; paul.rekoff@dowjones.com ...........................................................................= ..........................................................=20 Business Arthur Anderson is Under the Microscope Deborah Marchini 01/11/2002 CNNfn: Before Hours=20 © Copyright Federal Document Clearing House. All Rights Reserved.=20 DEBORAH MARCHINI, CNNfn ANCHOR, BEFORE HOURS: As we`ve been reporting this = morning Arthur Anderson is under the microscope. The accounting firm admitt= ed yesterday, employee had destroyed key records of its audits of Enron.=20 I`m joined by Howard Schilit, president of the Center for Financial Researc= h and Analysis, a Washington, D.C. firm that provides research on just such= incidences for institutional investors. Thanks for being here this morning.=20 HOWARD SCHILIT, CENTER FOR FINANCIAL RESEARCH & ANALYSIS: Good morning.=20 MARCHINI: First, question I have for you is, if documents were destroyed at= Arthur Anderson, the firm`s auditors, was a crime necessarily committed?= =20 SCHILIT: Well, it`s too early to conclude what happened, and what did not, = why the records were destroyed. But it certainly raises some very serious q= uestions about the internal controls that the accounting firm. When they we= re destroyed? It`s certainly a very serious matter.=20 MARCHINI: If these documents were destroyed after the company became the su= bject of civil and criminal investigations, that would be obstruction of ju= stice, I presume?=20 SCHILIT: Well, again, I`m an accountant by training, not an attorney. But t= he role of the auditor is to raise assurance amongst investors in the compe= tence of the company. And auditors more than any other profession, understa= nds the importance of documentary evidence, and the work papers are an esse= ntial part of that.=20 MARCHINI: So, what you`re saying here is that it`s suspicious, they should = have known better than to do this?=20 SCHILIT: Oh, I think this is a very serious situation, which certainly is g= oing to be investigated very closely.=20 MARCHINI: Is there any precedent for the destruction of documents in a case= like this, where an audit is being questioned?=20 SCHILIT: I have never heard of any situation where work papers have been de= stroyed. Very often when there had been frauds. And there have been very ma= jor frauds in the last few years. (INAUDIBLE), for example, in order to pie= ce together what happened, there were years of documents. And in the case o= f Enron, it`s going to simply make the investigation much more difficult.= =20 MARCHINI: Make the investigation much more difficult for both the criminal,= the Justice Department and the Securities and Exchange Commission, I presu= me?=20 SCHILIT: That`s right.=20 MARCHINI: What are the potential penalties for Arthur Anderson, if it turns= out they have broken the law?=20 SCHILIT: Again, that`s more of a legal question. In the case of past invest= igations by the SEC, and Arthur Anderson in particular has had several of t= hose recently. One with Waste Management (URL: http://www.wastemanagement.c= om/) . The other with Sunbeam (URL: http://www.sunbeam.com/) . There are mo= netary penalties and it could be very substantial.=20 The Securities and Exchange Commission may not permit this auditing firm to= take on any new clients. So it could be very substantial. Monetary and cer= tainly individuals involved who may have been obstructing justice, there ce= rtainly can be criminal penalties.=20 MARCHINI: What are the ramifications for Arthur Anderson`s business? You me= ntioned the prospect that they might be barred from not taking on any new a= uditing clients for awhile, if it turns out there`s a criminal violation. B= ut, they also run a rather large management consulting business. And I wond= er what this does to their ability to win business now in the free markets?= =20 SCHILIT: I`m sure it`s very difficult out there. Again, you probably want t= o speak to people at the company, to find out what their business wins (INA= UDIBLE) have been. But I`d be very surprised if this were not a very diffic= ult period for them to keep, and win new accounts.=20 MARCHINI: Understood. Howard Schilit, with the Center for Financial Researc= h and Analysis.=20 TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 888-CNNFN-01 OR USE OUR SE= CURE ONLINE ORDER FORM LOCATED AT WWW.FDCH.COM=20 THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY B= E UPDATED.=20 Content and programming copyright 2002 Cable News Network, Inc. ALL RIGHTS = RESERVED. Prepared by eMediaMillWorks, Inc. (f/k/a Federal Document Clearin= g House, Inc.) No license is granted to the user of this material other tha= n for research. User may not reproduce or redistribute the material except = for user`s personal or internal use and, in such case, only one copy may be= printed, nor shall user use any material for commercial purposes or in any= fashion that may infringe upon Cable News Network, Inc.`s copyright or oth= er proprietary rights or interests in the material; provided, however, that= members of the news media may redistribute limited portions (less than 250= words) of this material without a specific license from CNN so long as the= y provide conspicuous attribution to CNN as the originator and copyright ho= lder of such material. This is not a legal transcript for purposes of litig= ation. ...........................................................................= ..........................................................=20 O'Neill: Enron Situation `Just Another Piece Of Business' 01/11/2002 Dow Jones International News=20 (Copyright © 2002, Dow Jones & Company, Inc.)=20 NEW YORK -(Dow Jones)- U.S. Treasury Secretary Paul O'Neill said Friday tha= t the Enron (ENE) situation was "just another piece of business" to him whe= n the company's chief executive talked to him about its difficulties.=20 In an interview on ABC's "Good Morning America," O'Neill said it was "quite= appropriate" for Enron chief executive Kennethy Lay to talk to him Oct. 28= and "give me a heads-up" about its difficulties. O'Neill said Lay had alerted him to Enron's difficulties to make sure that = capital markets weren't disrupted.=20 The Treasury secretary said "he never asked me to help him at all." O'Neill= said Lay hadn't told him that Enron had overstated its profits and he hadn= 't heard anything from Lay that he hadn't already read in newspapers or see= n on television.=20 O'Neill said he hadn't then told President George W. Bush about the convers= ation because Bush was busy with the war on terrorism.=20 The Treasury secretary said "I'm a cabinet secretary. I know what my respon= sibilities are" and he doesn't have to run across the street to the preside= nt all the time.=20 O'Neill said Enron may be important but this "was just another piece of bus= iness." O'Neill said he was also busy with the financial war on terrorism.= =20 The Treasury secretary said it looks as if Enron was operating within the e= xisting rules for 401K plans and if that was the case then the government w= ill have to see if changes should be made in the rules. He said Bush doesn'= t want employees' 401K plans harmed by such situations. ...........................................................................= ..........................................................=20 O'Neill says Enron pension policies appear to have stayed within rules 01/11/2002 AFX News=20 © 2002 by AFP-Extel News Ltd=20 WASHINGTON (AFX) - Treasury Secretary Paul O'Neill said it appears Enron Co= rp was within the rules in managing its corporate pension affairs.=20 "At first blush it looks like Enron operated within the rules and regulatio= ns that existed, and still exist today with regard to how they managed thei= r 401(k) plan," O'Neill said in an interview on ABC's Good Morning America. O'Neill was addressing allegations that top corporate executives were able = to cash out of stock while most employees' corporate pensions held as fixed= , untradeable investments in Enron stock.=20 He noted he has been tasked by President George Bush to look at possible re= forms of the corporate pension system, which currently allows companies to = limit sales of company stock held within the funds, to prevent further case= s like Enron, where many employees lost most of their personal savings.=20 Yesterday, O'Neill said employees should ultimately be able to make decisio= ns on their corporate pension investments, and should have a choice of asse= ts to invest in.=20 cxa/jad ...........................................................................= ..........................................................=20 Business Enron's Auditor Says It Destroyed Documents Related to Case Jack Cafferty, Brooks Jackson 01/11/2002 American Morning with Paula Zahn=20 © Copyright eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House,= Inc.). All Rights Reserved.=20 Enron's auditor says it destroyed documents related to the case. The attorn= ey general, John Ashcroft, says he can't take part in the investigation.=20 JACK CAFFERTY, CNN ANCHOR: Let's go back to the story of Enron for a moment= . The "Wall Street Journal" this morning, they have said it best -- quote -= - "The storm cloud hanging over Enron and its long-time auditor, Arthur And= ersen, just got darker" -- unquote. The company's auditor says it destroyed documents related to the case. The = attorney general, John Ashcroft, says he can't take part in the investigati= on. He has a conflict of interest. Enron executives talked to two members o= f the president's cabinet just before the company collapsed.=20 CNN's senior correspondent Brooks Jackson joins us now from Washington with= a detailed look at the timeline of the fall of an energy giant -- Brooks, = good to have you with us.=20 BROOKS JACKSON, CNN SENIOR CORRESPONDENT: Good morning, Jack. Yes, those de= velopments, just a flurry of them here in the last 24 hours. You mentioned = the Arthur Andersen destruction of documents. Potentially the most serious = new development, the Securities and Exchange Commission took the unusual st= ep of saying they consider this extremely serious. And, boy, are they right= , because if any of those documents were destroyed after investigations beg= an, it could be criminal obstruction of justice.=20 As for Attorney General John Ashcroft's stepping aside, Democrats are sayin= g he did the right thing in doing that. He got something like $57,000 in ca= mpaign contributions from Enron for his senate campaign, before he was atto= rney general. Also, many attorneys in the U.S. Attorney's Office in Houston= are stepping aside. A lot of them have family ties to Enron executives and= Enron employees. That's, of course, where Enron is headquartered. Some of = the family members even lost money in 401Ks down there. So it's -- the Just= ice Department is still sorting out exactly who is going to be conducting t= his criminal investigation.=20 Those contacts with the White House -- or rather with the Bush administrati= on are interesting. Secretary O'Neill got two calls from Ken Lay, the Enron= chairman. O'Neill says those were just informational calls. He wasn't aske= d for any help. But Commerce Secretary Don Evans is saying that he was told= by Lay that Lay would welcome any help in preserving Enron's bond rating w= ith Moody's. Now -- and Lay's attorney is saying that he didn't ask for hel= p. In any case, no help was forthcoming, and the White House says they were= n't informed of this and that Lay and -- or excuse me -- that O'Neill and D= on Evans did the right thing.=20 Latest development today: 51 subpoenas are going out from the Permanent Sub= committee on Investigations of the U.S. Senate. Lay will get a subpoena. Ot= her Enron and Arthur Andersen officials will get a subpoena, all of the boa= rd members for the last several years of Enron, including -- and this is ve= ry unusual -- wife of U.S. Senator Phil Gramm -- Wendy Gramm, who was on th= e board and on the audit committee of Enron -- Jack.=20 CAFFERTY: Unbelievable. And of course, lost in all of this discussion -- no= t yours and mine -- but in the discussion about Enron in general is the fac= t that so many small investors and employees of the company lost their life= savings.=20 Brooks, we've got to move along. I thank you for that report very much -- B= rooks Jackson joining us from Washington.=20 TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SE= CURE ONLINE ORDER FORM LOCATED AT www.fdch.com.=20 THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY B= E UPDATED.=20 Content and programming copyright 2002 Cable News Network, Inc. ALL RIGHTS = RESERVED. Prepared by eMediaMillWorks, Inc. (f/k/a Federal Document Clearin= g House, Inc.) No license is granted to the user of this material other tha= n for research. User may not reproduce or redistribute the material except = for user's personal or internal use and, in such case, only one copy may be= printed, nor shall user use any material for commercial purposes or in any= fashion that may infringe upon Cable News Network, Inc.'s copyright or oth= er proprietary rights or interests in the material; provided, however, that= members of the news media may redistribute limited portions (less than 250= words) of this material without a specific license from CNN so long as the= y provide conspicuous attribution to CNN as the originator and copyright ho= lder of such material. This is not a legal transcript for purposes of litig= ation. ...........................................................................= ..........................................................=20 Business Many Enron Documents Destroyed Carol Costello, Allan Chernoff 01/11/2002 CNN: Live at Daybreak=20 © Copyright eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House,= Inc.). All Rights Reserved.=20 Failing energy giant Enron's chairman is a long-time major contributor to P= resident Bush's career and to the Republican party. Adding to all of that, = the company's accounting firm has revealed its employees destroyed document= s sought in the investigation.=20 CAROL COSTELLO, CNN ANCHOR: And now to the monster fallout from the collaps= e of energy giant, Enron. The White House admits Enron officials sought the= administration's help last fall, shortly before the company collapsed. Enr= on's chairman is a long-time major contributor to President Bush's career a= nd to the Republican party. And Attorney General John Ashcroft has disquali= fied himself from the criminal investigation of Enron because of campaign d= onations he received from the company. Adding to all of that, the company's accounting firm has revealed its emplo= yees destroyed documents sought in the investigation. For details on that, = here's CNN Financial News Correspondent Allan Chernoff.=20 (BEGIN VIDEOTAPE)=20 ALLAN CHERNOFF, CNN FINANCIAL NEWS (voice-over): Four investigators from th= e House and Energy Commerce Committee arrived at Andersen offices in Housto= n yesterday to interview Enron auditors and collect documents. But they wer= e told there's a problem. Thursday afternoon, Andersen admitted material wa= s missing.=20 In recent months, individuals in the firm involved with the Enron engagemen= t disposed of a significant but undetermined number of electronic and paper= documents and correspondence relating to the Enron engagement. Potentially= thousands of documents that were part of Enron audits, according to the Ho= use Committee. Most of them, electronic, that were deleted in September, Oc= tober and November, the three months prior to Enron's bankruptcy filing.=20 FRANKLIN VELIE, FORMER FEDERAL PROSECUTOR: This is a surprising, though, an= d very disappointing development. You would not ordinarily expect a major l= oss of documents by an accounting or auditing firm with respect to the affa= irs of its -- of its client.=20 CHERNOFF: Securities and Exchange Commission Enforcement Chief Stephen Cutl= er said, "Destruction of documents is an extremely serious matter," which h= e pledged, "will be included within the scope of our investigation." As the= company's auditor, Andersen had given a thumbs-up to Enron's financial sta= tements. The SEC and Justice Department are investigating whether those ver= y statements were used to hide Enron's financial condition from investors.= =20 JOSEPH BERARDINO, CEO, ARTHUR ANDERSEN: If my firm has made errors in judgm= ent, we will acknowledge them. We will make the changes needed to restore c=
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