Governmental Affairs Committee Holds Its First Enron Hearing
WASHINGTON, Jan. 24–Sen. Joseph I. Lieberman, D-Conn., opened the first round of Senate hearings on the Enron Corp. financial collapse yesterday with an avowal that the Governmental Affairs Committee he chairs will propose reforms “to make sure that nothing like this happens again.”
Enron, once the seventh largest corporation in the United States, filed for Chapter 11 bankruptcy on Dec. 2, leaving thousands of its employees and retirees with drastically reduced retirement funds as well as wiping out customers’ and shareholders’ company-related accounts.
“This is not just a tempest in a teapot,” Lieberman said as the hearing began. “It is an unprecedented corporate storm that has already hurt thousands of people and now leaves dark clouds over America’s economy and Americans’ confidence in their future economic security. This scandal cries out for thorough congressional investigation to make sure that nothing like this happens again.”
The committee intends to examine whether government agencies could have intervened before the ene
rgy company’s accounting irregularities led to its collapse and whether these agencies need new powers to handle such situations in the future. Among yesterday’s witnesses was Arthur Levitt Jr., the former chairman of the Securities and Exchange Commission (SEC), who said a better system of checks and balances is needed to restore the public’s trust. “Healthy and resilient financial markets depend on the accountability of every, single one of its key actors – managers, auditors, directors, analysts, lawyers, rating agencies, standard setters, and regulators,” Levitt said.
The committee also heard from Yale University Law and Legal History professor John H. Langbein, who specializes in pension and employee benefit law. He said the government may want to consider giving a federal protection guarantee to individuals with 401(k) retirement plans, as the Employee Retirement Income Security Act (ERISA) requires for those who are covered by defined-benefit pension plans.
Lieberman opened the hearing by promising that the committee would act in a bipartisan manner in investigating Enron’s alleged wrongdoings. “Because Enron has made substantial political contribution to members of Congress and the executive branch, some have questioned our capacity to conduct an independent, thorough investigation,” he said.
The Governmental Affairs Committee hearings will look at the federal agencies that had jurisdiction over Enron and at the role of the White House “to determine what it knew and did,” Lieberman said.
The conservative National Legal and Policy Center recently wrote a letter to Lieberman asking him to “avoid the appearance of a double standard” and recuse himself from the hearings because he had received $112,546 in campaign contributions since 1997 from Citigroup Inc’s political action committee and employees. Citigroup is Enron’s biggest creditor.
Lieberman has not said whether he plans to return these contributions as well as nearly $35,000 that Enron’s former auditing firm, Arthur Andersen, had given to the New Democrat Network, a political action committee that the Senator co-founded in 1996.
Published in The Waterbury Republican-American, in Waterbury, Connecticut.
