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Financial Collapse of Enron Corp
Subcommittee on Oversight and Investigations
Prepared Statement of The Honorable Billy Tauzin Thank you Chairman
Greenwood. And let me commend you for doing such a thorough job throughout this
process. This Subcommittee's task has been to investigate the reasons behind
this sad tale of Enron's collapse, so that the Full Committee can understand
what went wrong. Only
by accurately identifying the basic problems can we accurately identify an
appropriate remedy. And I believe
we've gone a long way towards this goal. We have more to learn, but we've
been able to begin exploring remedies because of the Subcommittee's good and
instructive work, and I thank you for that. This
morning we turn to the attorneys - the people whose duty it was to protect the
interests of Enron and its shareholders. I look forward to hearing what they
have to say for themselves. Last
month, when we had Sherron Watkins before us, I pointed to a legal doctrine
known as the last clear chance; this holds that, basically, even if you're
totally in the right on the highway, if you had that last clear chance to avoid
a crash, you could be responsible for what happened. Sherron
Watkins offered Enron's leadership that last clear chance to avoid the crash.
And what strikes me today about her action as a loyal employee was that Sherron
Watkins was not an attorney. She did the right thing, but she did
something that was not in her job description, something not directly associated
with her function at Enron. What
also strikes me is that some of the people who should have shown Enron
leadership the proper course -- who could have prevented the crash -- are
sitting before us today. They could have acted before matters got out of hand.
They could have been more skeptical of the proposals and promises of the
business teams. They could have looked to learn what was really happening, and
warned Enron leadership about what they found. But they didn't do this. They
were not around to provide a last clear chance to save the company. I
think it says something when you have non-attorneys doing what attorneys are
supposed to be doing. The attorneys are the people others rely upon to make sure
matters are okay, are legal, are not going to put a company at undue risk. They're
the adult supervision. And it's clear from our investigation that others in
the company, particularly on the Board of Directors, either relied on this
supervision, or - as Mr. Skilling seems to have done - hid behind it to
excuse their actions. Now
I understand the arrangements of duties and functions among the attorneys was
complex. Responsibilities were divided. I know that Enron was a huge and
complicated operation. And so I
want to hear their side of the story. I
want to hear from them about the LJM transaction approval process, which was
meant to prevent the CFO from taking advantage of the company and its
shareholders. I look forward to learning about the attorney reactions to
emerging warnings that the process was flawed, that questionable negotiations
were taking place, that there were potentially serious problems to investigate. I
want to know why outside counsel, with the duty to make sure extremely complex
transactions would not put Enron at risk, saw fit to sign off - providing the
legal cover for what would turn out to be very destructive transactions indeed. We do have a lot to cover this morning, Mr. Chairman. And I too would like to thank the witnesses for coming before us this morning. They've been responsive to our staff's requests and I thank them for their willingness to help us accurately identify the problems here.
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