The Justice Department is opening a criminal investigation into last month's collapse of energy giant Enron. The Texas-based company's fall from being the nation's largest energy trader to becoming the largest corporate collapse ever, is raising questions about its business practices as well as its ties to the White House.
The nation's largest marketer of electricity and natural gas, Enron had been a Wall Street favorite, once ranking 7th on the Fortune 500 list of top companies. Now, Congress and the Justice Department want to know how the Houston giant, which was valued at nearly 80 billion dollars just last year, could fall so fast, and without apparent warning or oversight.
Michigan Senator Carl Levin expects to subpoena top Enron officials and company documents during hearings later this month. "Something this massive should not ever happen again and it should not have happened in the first place," he said.
Both the Justice Department and the Securities and Exchange Commission are also looking into whether Enron broke the law through poor accounting methods or by deliberately hiding billions of dollars in debt, failing to inform stockholders about the company's imminent collapse. Many rank-and-file Enron employees saw a life of savings in company stock wiped out while top Enron officials were able to sell their stock before the collapse.
Democrat Joesph Lieberman chairs the Senate government affairs committee, just one of a handful of Congressional oversight panels planning hearings into the Enron collapse, and into the question of why federal regulators apparently failed to see trouble coming.
"The suddenness with which this company fell is shocking. It was in the top ten in largest companies in the country," he said. "Even the savviest experts on Wall Street were apparently blindsided when a $77 billion company loses nearly all of its market value and plunges into bankruptcy in a matter of weeks to the surprise apparently of everyone including those whose business it is to know better."
Also expected to come under scrutiny are Enron's ties to the White House. President Bush and Vice President Dick Cheney used to work in the Texas oil industry. And while the president says he wants a full review of the Enron collapse, he's already facing questions about his administration's relations with Enron chairman Kenneth Lay.
"I do know that Mr. Lay came to the White House early in my administration along with 20 other business leaders to discuss the state of the economy. I have not met with him personally," he said.
The Enron chief was among the largest donors to the Bush presidential campaign and Vice President Cheney met at least once with him last year. Congress wants to know the full extent of Enron's ties to the White House and whether the bankrupt company helped influence the administration's policy on energy.