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California's Senators Call for Enron Probe Over Energy Crisis - 2002-05-07


California's U.S. Senators are asking the Justice Department to conduct an investigation into what role the Enron Corporation may have played in the state's energy crisis. Enron collapsed last December in the largest bankruptcy in U.S. history.

The Federal Energy Regulatory Commission has released documents written by Enron lawyers detailing the company's electricity trading strategies during California's power crisis in 2000 and 2001.

The memos indicate Enron deliberately moved power out of the state and then resold it back to California at higher prices.

California's two Democratic Senators, Barbara Boxer and Dianne Feinstein, sent a letter to Attorney General John Ashcroft Tuesday seeking a Justice Department investigation.

Senator Feinstein discussed the matter on the Senate floor. "Enron was not only manipulating prices in the west, but also engaged in a number of calculated strategies to either receive payment for energy not delivered or increase price. In my book, this is outright fraud," she said.

As Senator Feinstein spoke, members of Enron's board of directors were telling a Senate panel that company executives and auditors concealed information that would have helped them deal with the firm's financial problems.

Herbert Winokur is a director and chairman of the Enron board's finance committee. "We cannot be criticized for failing to address or remedy problems that have been concealed from us," Mr. Winokur said.

John Duncan is former chairman of the board's executive committee. "Certain members of management and our outside auditors were well-aware of the problems facing the company and they did not tell us," Mr. Duncan said.

But members of the Senate Government Affairs Committee said the board of directors was also responsible for the company's collapse and for failing to protect company shareholders, many of whom lost their life savings.

Senator Carl Levin, a Democrat from Michigan, is committee chairman. "There were plenty of things you were told, and that you knew should have triggered much stronger action on your part. I just do not think the facts support your denial of any responsibility, and I just do not buy it," Senator Levin said.

Besides Congress, the Justice Department and the Security and Exchange Commission are also investigating Enron's collapse.

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