WASHINGTON – Governmental Affairs Committee Chairman Joe Lieberman, D-Conn., and Ranking Member Fred Thompson, R-Tenn., sent letters to four federal regulatory agencies Friday to determine what the agencies knew about how Enron was run and whether they could have done anything to avert the company?s collapse.
The letters seek information about agency communications with Enron Corporation and its accountant, Arthur Andersen LLP, as well as any concerns, complaints, investigations or enforcement actions involving Enron, dating back to 1992.
The letters underscore the Governmental Affairs Committee?s commitment to ensure that federal regulatory agencies are doing all they can to protect the public interest and to prevent a future Enron from occurring. Five thousand people lost their jobs, thousands more lost billions of dollars in savings, and the U.S. capital markets have been shaken as a result of the deceptive business practices that led to Enron?s bankruptcy and the failure of anyone inside or outside the government to anticipate it.
?We want to know where the watchdogs were,? said Lieberman. ?Was there anything they could have done to prevent the financial loss experienced by so many hard-working people and is there anything they can do to prevent a similar loss in the future??
?I am pleased to be able to join Chairman Lieberman in pursuing information to further the Governmental Affairs Committee’s investigation into the collapse of Enron Corporation,? said Thompson. ?I believe the American people deserve to learn what role federal agencies did play, could have played, or should have played over the years in helping to avoid or mitigate the failure of Enron.?
Letters, dated February 15, were sent to the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Energy Regulatory Commission, and the Labor Department.
The Enron subpoena, in addition to information about the company?s contacts with the four agencies, also seeks documents regarding bonuses and deferred compensation paid to top company management, as well as information regarding severance pay for lower-level employees. A second subpoena was issued to Arthur Andersen seeking information about its contacts with federal regulatory agencies regarding Enron.
Attached are copies of the four agency letters:
The Honorable James E. Newsome
Chairman
Commodity Futures Trading Commission
3 Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Dear Chairman Newsome:
The collapse of Enron Corporation has served as a wake-up call for the nation?s employees, investors and its governmental leadership. When Enron filed for bankruptcy in December 2001, it marked the largest corporate failure in United States history. But it is not merely the magnitude of the collapse that makes this a matter of significant public concern. Rather, what is particularly troubling is the extent to which Enron?s unraveling appeared to catch the regulatory and financial communities unaware.
The rapid collapse of what was once ranked as the nation?s seventh largest company demands public scrutiny. Given Enron?s size, its bankruptcy financially imperils thousands of employees, as well as a far broader universe of shareholders. Just as importantly, it threatens to undermine public confidence in the market system, which depends on investors buying and selling stock based on honest reporting and fair appraisals of a company?s worth.
In the wake of Enron?s financial demise, the public has been asking many questions ? not only about whether employees and shareholders can rely on the market to offer them fair and complete information about companies in which they wish to invest, but also whether they can depend on the government to protect them against wrongdoing by corporate and market insiders.
Pursuant to its jurisdiction to investigate the efficiency and economy of operations of all branches of the government (S. Res. 54, 107th Congress), the Senate Governmental Affairs Committee is seeking to answer some of those questions. The Committee is trying to find out whether the various federal agencies charged with overseeing or regulating part of Enron?s business could have done something to detect or prevent the problems that led to the company?s downfall and the losses of thousands of jobs and billions of investors? and employees? dollars. What oversight did federal regulators provide to Enron?s activities? Was there more that could or should have been done to avert the collapse? Do agencies need additional authorities to be able to help provide effective oversight?
With regard to the Commodity Futures Trading Commission (CFTC), the Committee seeks the information outlined below. Please interpret the term ?the Commission? to include any Commissioner, officer or employee of the CFTC and please interpret the term ?Enron? to include Enron Corp., Enron Capital Trust I and Enron Capital Trust II; their officers, directors, employees, and representatives, including anyone purporting to act on their behalf; and each of their affiliates, subsidiaries, partnerships, special purpose entities, joint ventures, trusts or any other entity in which Enron Corp., Enron Capital Trust I, or Enron Capital Trust II is or was a shareholder, partner, investor, trustee, or member. In addition, please interpret the term ?communications? to mean all communications, whether written, oral, electronic, in-person or through any other means. Finally, when identifying individuals in response to these questions, please give their full name, title and the company, agency, or CFTC division for which they work(ed).
1) Please identify all individuals and entities affiliated in any way with Enron who have registered with the Commission pursuant to the Commodity Exchange Act from January 1, 1992 to the present. For each such individual or entity, please indicate:
a) the date that such individual or entity first registered with the Commission
b) if such individual or entity ceased to be registered with the Commission, the date the registration terminated
2) a) Please list, and briefly describe, any documents, materials or other information that individuals or entities registered under the Commodity Exchange Act are required to file with or report to the Commission.
b) Does the Commission regularly conduct any review of filings made by individuals or entities registered under the Commodity Exchange Act? If so, please describe the policy governing such reviews. What factors are used to determine which individuals? or entities? filings are reviewed, which years? filings are selected, and how frequently the reviews are conducted?
c) Please list any reviews the Commission conducted of filings by any individual or entity affiliated with Enron from January 1, 1992 to the present. For each such review, please indicate:
i) the date on which the review was initiated
ii) the date on which the review was completed
iii) who conducted the review and who supervised it
iv) any findings or conclusions reached as a result of the review
v) any actions taken as a result of the review
3) Please list all communications between Enron and the Commission from January 1, 1992 and December 2, 2001, excluding publicly available, periodic filings required by law.
a) For any meetings, whether in-person or through telephone or videoconferencing, please identify:
i) who initiated the meeting
ii) all those who were present at the meeting
iii) the subject matter(s) of the meeting
iv) the date of the meeting
v) any action taken by the Commission in response to the meeting
b) For all other communications, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date of the communication
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
4) Please list all communications received by the Commission from January 1, 1992 to December 2, 2001, which raised any questions or indicated any concerns about whether Enron was following the laws, rules, and policies administered and/or enforced by the Commission or which otherwise complained in any way about the activities of Enron. For each such communication, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date the communication was received by the Commission
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
vi) for any meeting, the date of the meeting and all those who attended the meeting
5) a) Please list all investigations, whether formal or informal, of Enron initiated by the Commission since January 1, 1992. For each listed, please indicate:
i) the date the investigation was opened
ii) the subject matter of the investigation
iii) the basis for opening the investigation
iv) who conducted the investigation and who supervised the investigation
v) the findings or conclusions of the investigation
vi) any action taken by the Commission as a result of the investigation
vii) the date the investigation was closed
b) Excluding information in response to paragraph 5a, please list all communications generated or distributed within the Commission from January 1, 1992 to December 2, 2001, which raised any questions or indicated any concerns about whether Enron was following the laws, rules, and policies administered and/or enforced by the Commission or which otherwise complained in any way about the activities of Enron. For each such communication, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date the communication was received by the Commission
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
vi) for any meeting, the date of the meeting and all those who attended the meeting
6) Please list all enforcement actions, whether formal or informal, judicial or non-judicial, administrative or non-administrative, including but not limited to warnings letters, civil or criminal legal actions, cease and desist orders, injunctions, consent decrees and other settlements, suspensions, fines, redress or disgorgement, or other efforts to correct or penalize noncompliance with applicable law and regulations, taken by the Commission since January 1, 1992 against Enron. For each such enforcement action, please state the basis for the action and the date of the action.
7) On April 13, 1993, the Commission issued an order that exempted certain energy contracts from provisions of the Commodity Exchange Act ?except sections 2(a)(1)(B) of the Act and the provisions of sections 6(c), 6c, 6(d), and 9(a)(2) of the Act, to the extent that these provisions prohibit manipulation of the market price of any commodity in interstate commerce or for future delivery on or subject to the rules of any contract market . . . .? On December 21, 2000, the Commodity Futures Modernization Act of 2000 was signed into law. This act exempted certain transactions in certain commodities from provisions of the Commodity Exchange Act, but provided that these transactions would be nonetheless subject to ?sections 4b, 4o, 6(c), 6(d), 6c, 6d and 8a on the regulations of the Commission pursuant to section 4c(b) proscribing fraud in connection with commodity options transactions? and to ?sections 6(c), 6(d), 6c, 6d, 8a, and 9(a)(2), to the extent such sections prohibit manipulation of the market price of any commodity in interstate commerce . . . .?
a) Please describe all actions, if any, taken by the Commission with respect to Enron 1) since April 13, 1993 to enforce the Commodity Exchange Act?s proscription on market price manipulation, and 2) since December 21, 2000, the Commodity Futures Modernization Act?s proscription on fraud and market price manipulation. For each such action, please provide the following:
i) the date on which the action was initiated
ii) the date on which the action was completed
iii) who within the agency was responsible for the action
iv) a brief description of the action taken
b) Please describe the Commission?s efforts with respect to exempt commodities and transactions (including, but not limited to energy contracts) to ensure compliance, since April 13, 1993, with the Commodity Exchange Act?s proscription on market price manipulation, and, since December 21, 2000, with the Commodity Futures Modernization Act?s proscriptions on fraud and market price manipulation, including but not limited to any investigations, studies, market monitoring or other means of identifying and counteracting such proscribed activities.
8) Please list all communications between the Commission and other federal departments or agencies from January 1, 1992 to December 2, 2001 concerning compliance with, interpretation of, exemption or waiver from, changes to, enforcement of, or any regulatory action with respect to the laws, regulations, and policies administered or enforced by the Commission and specifically referring or relating to Enron. For each such communication, please identify:
a) who sent the communication
b) who received the communication
c) the date of the communication
d) the subject matter of the communication
e) any action taken in response to the communication
f) for any meetings responsive to this request, the date of the meeting and all those who attended the meeting
The Committee would appreciate your prompt attention to this request, but in any event seeks a response no later than March 4, 2002. Should you believe that your response to this letter will require the disclosure of confidential information, please let us know in advance of this date so that we may determine whether alternate arrangements for production are appropriate. Please contact Cindy Lesser of Senator Lieberman?s staff at (202) 224-2627 and Bill Outhier of Senator Thompson?s staff at (202) 224-4751 in response to this request.
Sincerely,
Joseph I. Lieberman Fred Thompson
Chairman Ranking Minority Member
The Honorable Elaine L. Chao
Secretary
Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210
Dear Secretary Chao:
The collapse of Enron Corporation has served as a wake-up call for the nation?s employees, investors and its governmental leadership. When Enron filed for bankruptcy in December 2001, it marked the largest corporate failure in United States history. But it is not merely the magnitude of the collapse that makes this a matter of significant public concern. Rather, what is particularly troubling is the extent to which Enron?s unraveling appeared to catch the regulatory and financial communities unaware.
The rapid collapse of what was once ranked as the nation?s seventh largest company demands public scrutiny. Given Enron?s size, its bankruptcy financially imperils thousands of employees, as well as a far broader universe of shareholders. Just as importantly, it threatens to undermine public confidence in the market system, which depends on investors buying and selling stock based on honest reporting and fair appraisals of a company?s worth.
In the wake of Enron?s financial demise, the public has been asking many questions ? not only about whether employees and shareholders can rely on the market to offer them fair and complete information about companies in which they wish to invest, but also whether they can depend on the government to protect them against wrongdoing by corporate and market insiders.
Pursuant to its jurisdiction to investigate the efficiency and economy of operations of all branches of the government (S. Res. 54, 107th Congress), the Senate Governmental Affairs Committee is seeking to answer some of those questions. The Committee is trying to find out whether the various federal agencies charged with overseeing or regulating part of Enron?s business could have done something to detect or prevent the problems that led to the company?s downfall and the losses of thousands of jobs and billions of investors? and employees? dollars. What oversight did federal regulators provide to Enron?s activities? Was there more that could or should have been done to avert the collapse? Do agencies need additional authorities to be able to help provide effective oversight?
With regard to the Department of Labor, the Committee seeks information about the federal oversight of Enron?s retirement, savings and benefit plans. As you know, many of Enron?s employees had a substantial proportion of their 401(k) accounts invested in company stock, and with the collapse of the company?s stock price, many of these employees have lost much or all of their retirement savings.
The specific information sought by the Committee is outlined below. Please interpret the term ?the Department? to include any officer or employee of the Department of Labor, and please interpret the term ?Enron? to include Enron Corp., Enron Capital Trust I and Enron Capital Trust II; their officers, directors, employees, and representatives, including anyone purporting to act on their behalf; each of their affiliates, subsidiaries, partnerships, special purpose entities, joint ventures, trusts or any other entity in which Enron Corp., Enron Capital Trust I, or Enron Capital Trust II is or was a shareholder, partner, investor, trustee, or member; and any of their 401(k) plans? directed trustees or recordkeepers, including but not limited to Northern Trust Corporation, Northern Trust Retirement Consulting, Wilmington Trust, and Hewitt Associates. In addition, please interpret the term ?communications? to mean all communications, whether written, oral, electronic, in-person or through any other means. Also, please interpret ?retirement, savings or benefit plan? to include any qualified savings plans covered by ERISA, any deferred compensation plan or any other retirement, savings or benefit plans, programs or funds. Finally, when identifying individuals in response to these questions, please give their full name, title and the company, agency, or Department of Labor office for which they work(ed).
1) a) Does the Department regularly review company retirement, savings or benefit plans or plan-related filings. If so, please describe the nature of these reviews and any policy governing such reviews. Are all companies? plans reviewed? If not, what factors does the Department use in selecting which plans to review? How frequently are such reviews conducted?
b) Please list any review the Department conducted of any Enron retirement, savings or benefit plan since January 1, 1992. For each such review, please indicate:
i) the date on which the review was initiated
ii) the date on which the review was completed
iii) who conducted the review and who supervised it
iv) any findings or conclusions reached as a result of the review
v) any actions taken as a result of the review
2) Please list all communications from January 1, 1992 to December 2, 2001 between Enron and the Department that involved, mentioned, or related to any Enron retirement, savings or benefit plan, excluding any publicly available periodic filings required by law.
a) For any meetings, whether in-person or through telephone or videoconferencing, please indicate:
i) who initiated the meeting
ii) all those who were present at the meeting
iii) the subject matter(s) of the meeting
iv) the date of the meeting
v) any action taken by the Department in response to the meeting
b) For all other communications, please indicate:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date of the communication
iv) the subject matter of the communication
v) any action taken by the Department in response to the communication
3) Please list all communications received by the Department from January 1, 1992 to December 2, 2001, which raised any questions or indicated any concerns about any Enron retirement, savings or benefit plan, including but not limited to the proportion of the 401(k) plan that was invested in Enron stock and restrictions on participants? ability to sell that stock. For each such communication, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date the communication was received by the Commission
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
vi) for any meeting, the date of the meeting and all those who attended the meeting
4) a) Please list all investigations, whether formal or informal, opened by the Department since January 1, 1992, relating, in whole or in part, to any Enron retirement, savings or benefit plan. For each investigation listed, please indicate:
i) the date the investigation was opened
ii) the subject matter of the investigation
iii) the basis for opening the investigation
iv) who conducted the investigation and who supervised the investigation
v) the findings or conclusions of the investigation
vi) any action taken by the Department as a result of the investigation
vii) the date the investigation was closed
b) Excluding information provided in response to paragraph 4a, please list all communications generated or distributed within the Department from January 1, 1992 to December 2, 2001, which raised any questions or indicated any concerns about any Enron retirement, savings or benefit plan, including but not limited to the proportion of the 401(k) plan that was invested in Enron stock and restrictions on participants? ability to sell that stock. For each such communication, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date the communication was received by the Commission
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
vi) for any meeting, the date of the meeting and all those who attended the meeting
5) Please list all enforcement actions, whether formal or informal, judicial or nonjudicial, administrative or nonadministrative, including but not limited to warnings letters, civil or criminal legal actions, cease and desist orders, injunctions, consent decrees and other settlements, suspensions, fines, redress or disgorgement, or other efforts to correct or penalize noncompliance with applicable law and regulations, taken by the Department since January 1, 1992 against Enron relating in whole or in part to any Enron retirement, savings or benefit plan. For each such enforcement action, please state the basis for the action and the date of the action.
6) Participants in Enron?s 401(k) program reportedly were prohibited from altering any of their 401(k) investments for a period of time in Fall 2001. When and how did the Department learn of this so-called ?lock-down? period? What, if any, action did the Department take at that time? Please identify the DOL employees involved in the actions, if any, described in response to this question.
7) Please list all communications between the Department and other federal departments or agencies from January 1, 1992 to December 2, 2001 concerning compliance with, interpretation of, exemption or waiver from, changes to, enforcement of, or any regulatory action with respect to the laws, regulations, and policies administered or enforced by the Department and specifically referring or relating to any Enron retirement, savings or benefit plan. For each such communication, please identify:
a) the sender(s) of the communication
b) the recipients(s) of the communication
c) the date of the communication
d) the subject matter of the communication
e) any action taken in response to the communication
f) for any meetings responsive to this request, the date of the meeting and all those who attended the meeting
8) On February 4, 2002, CBS News reported that Robin Hosea contacted the Department of Labor with concerns that money had been improperly moved from employee benefit accounts. Was the Department in fact contacted by Ms. Hosea? If so, when was her contact(s) received, and by whom? Who else, if anyone, at the Department communicated with Ms. Hosea? What action, if any, was taken as a result of Ms. Hosea contact(s) with the Department? What conclusions, if any, has the Department reached regarding the issues raised by Ms. Hosea?
The Committee would appreciate your prompt attention to this request, but in any event seeks a response no later than March 4, 2002. Should you believe that your response to this letter will require the disclosure of confidential information, please let us know in advance of this date so that we may determine whether alternate arrangements for production are appropriate. Please contact Holly Idelson of Senator Lieberman?s staff at 224-2627 and Bill Outhier of Senator Thompson?s staff at (202) 224-4751 in response to this request.
Sincerely,
Joseph I. Lieberman Fred Thompson
Chairman Ranking Minority Member
The Honorable Patrick H. Wood III
Chairman
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
Dear Chairman Wood:
The collapse of Enron Corporation has served as a wake-up call for the nation?s employees, investors and its governmental leadership. When Enron filed for bankruptcy in December 2001, it marked the largest corporate failure in United States history. But it is not merely the magnitude of the collapse that makes this a matter of significant public concern. Rather, what is particularly troubling is the extent to which Enron?s unraveling appeared to catch the regulatory and financial communities unaware.
The rapid collapse of what was once ranked as the nation?s seventh largest company demands public scrutiny. Given Enron?s size, its bankruptcy financially imperils thousands of employees, as well as a far broader universe of shareholders. Just as importantly, it threatens to undermine public confidence in the market system, which depends on investors buying and selling stock based on honest reporting and fair appraisals of a company?s worth.
In the wake of Enron?s financial demise, the public has been asking many questions ? not only about whether employees and shareholders can rely on the market to offer them fair and complete information about companies in which they wish to invest, but also whether they can depend on the government to protect them against wrongdoing by corporate and market insiders.
Pursuant to its jurisdiction to investigate the efficiency and economy of operations of all branches of the government (S. Res. 54, 107th Congress), the Senate Governmental Affairs Committee is seeking to answer some of those questions. The Committee is trying to find out whether the various federal agencies charged with overseeing or regulating part of Enron?s business could have done something to detect or prevent the problems that led to the company?s downfall and the losses of thousands of jobs and billions of investors? and employees? dollars. What oversight did federal regulators provide to Enron?s activities? Was there more that could or should have been done to avert the collapse? Do agencies need additional authorities to be able to help provide effective oversight?
With regard to the Federal Energy Regulatory Commission (FERC), the Committee seeks the information outlined below. Please interpret the term ?the Commission? to include any Commissioner, officer or employee of the FERC and please interpret the term ?Enron? to include Enron Corp., Enron Capital Trust I and Enron Capital Trust II; their officers, directors, employees, and representatives, including anyone purporting to act on their behalf; and each of their affiliates, subsidiaries, partnerships, special purpose entities, joint ventures, trusts or any other entity in which Enron Corp., Enron Capital Trust I, or Enron Capital Trust II is or was a shareholder, partner, investor, trustee, or member. In addition, please interpret the term ?communications? to mean all communications, whether written, oral, electronic, in-person or through any other means. Finally, when identifying individuals in response to these questions, please give their full name, title and the company, agency, or FERC division for which they work(ed).
1) Please identify all entities affiliated in any way with Enron which are FERC regulated generators, utilities, marketers or transmission providers or affiliates since January 1, 1992. For each such entity please indicate:
a) the date that such entity first became regulated by the Commission, and in the case where Enron acquired an already regulated entity, the date that Enron became the regulated party
b) if such entity ceased to be regulated by the Commission, the date such regulation terminated
2) a) Please list, and briefly describe, any documents, materials or other information that entities regulated by the Commission must file with or report to the Commission.
b) Does the Commission regularly conduct any review of filings made by entities regulated by the Commission? If so, please describe the policy governing such reviews. Specifically, what factors are used to determine which entities? filings are reviewed, which years? filings are selected, and how frequently the reviews are conducted?
c) Please list any reviews the Commission conducted of filings by any entity affiliated with Enron from January 1, 1992 to the present. For each such review, please indicate:
i) the date on which the review was initiated
ii) the date on which the review was completed
iii) who conducted the review and who supervised it
iv) any findings or conclusions reached as a result of the review
v) any actions taken as a result of the review
3) Please list all communications between Enron and the Commission from January 1, 1992 and December 2, 2001, excluding publicly available, periodic filings required by law or regulation.
a) For any meetings, whether in-person or through telephone or videoconferencing, please identify:
i) who initiated the meeting
ii) all those who were present at the meeting
iii) the subject matter(s) of the meeting
iv) the date of the meeting
v) any action taken by the Commission in response to the meeting
b) For all other communications, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date of the communication
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
4) Please list all communications received by the Commission from January 1, 1992 to December 2, 2001, which raised any questions or indicated any concerns about whether Enron was following the laws, rules, and policies administered and/or enforced by the Commission or which otherwise complained in any way about the activities of Enron. For each such communication, please identify:
i) the sender(s) of the communication
ii) the recipient(s) of the communication
iii) the date the communication was received by the Commission
iv) the subject matter of the communication
v) any action taken by the Commission in response to the communication
vi) for any meeting, the date of the meeting and all those who attended the meeting
5) a) Please list all investigations, whether formal or informal, of Enron initiated by the Commission since January 1, 1992. For each investigation listed, please indicate:
i) the date the investigation was opened
ii) the subject matter of the investigation
iii) the basis for opening the investigation
iv) who conducted the investigation and who supervised the investigation
v) the findings or conclusions of the investigation
vi) any action taken by the Commission as a result of the investigation
vii) the date the investigation was closed
b) Excluding information in response to Item 5a, please list all communications generated or distributed within the Commission from January 1, 1992 to December 2, 2001, which raised any questions or indicated any concerns about whether Enron was following the laws, rules, and policies administered and/or enforced by the Commission or which otherwise complained in any way about the activities of Enron. For each such communication, please identify:
i) the sender(s) of the communication