The energy giant fell apart after admitting it kept $2 billion off the books and overstated earnings the past four years, in the largest bankruptcy in U.S. history. Former Chief Financial Officer Andrew Fastow and other unnamed Enron executives have been quietly subpoenaed.
Their testimony is key to unraveling Enron's perplexing maze of 2,800 subsidiaries -- more than 800 of them located in havens known for financial secrecy, like the Cayman Islands.
"They don't have to register those bank accounts. They don't have to explain to the IRS or anybody else how that money got there. They don't even have to disclose whether or not there's any money there," said Tyson Slocum, research director for the advocacy group Public Citizen's Critical Mass Energy and Environment Program.
It was Fastow who, as Enron's finance chief, set up and ran questionable partnerships.
Critics say those partnerships and the web of subsidiaries was designed to keep billions of dollars in losses and debt off the books. In short: Enron looked healthy and Fastow got richer.
Enron faces a class-action lawsuit brought on behalf former employees who collectively lost out on hundreds of millions of dollars in 401(k) retirement savings due to the recent collapse of the company's stock.
"This insider, Andrew Fastow, decided that his services were so valuable that not only was he making all this money in stock options from the company, but he also was going to pocket another $30 million for coming up with this bright idea," said Eli Gottesdiener, lead counsel for the plaintiffs in the lawsuit.
It's not clear when the executives knew Enron was in big trouble, but last August CEO Jeffrey Skilling abruptly resigned. His replacement Kenneth Lay assured employees there was no problem, and urged them to hang onto their stock.
"I guess the thing that hurt the most is equivalent to being betrayed by a close friend, because we had that much loyalty and trust in the company," said Boyce.
Investigators want to know why some Enron executives were talking up the company but cashing in their own stock.
According to plaintiff's attorneys, over three years Lay reportedly dumped 27 percent of his holdings, $101 million worth, while Skilling sold 39 percent, collecting $67 million. Fastow's attorney admits he sold almost half of his holdings.
"That is very suggestive of knowledge that there was something wrong with the company and that they better get while the getting was still good," said Gottesdiener.
Although Enron executives have denied wrongdoing, some shareholders are suing to get at more than a billion dollars top officials made from those inside trades. This week a federal judge ruled the shareholders may be entitled to that money if it is proven the executives knew the company was in trouble when they sold their shares.
Enron, which was formed in 1985 and has 20,000 employees, was once the world's top buyer and seller of natural gas and the largest electricity marketer in the United States. It also marketed coal, pulp, paper, plastics, metals and fiber-optic bandwidth.
Just a year ago, Enron stock traded at $85 per share. Today, it is less than $1.
The news of the criminal investigation comes amid questions about the White House's dealings with Enron, which contributed to President Bush's election campaign.
The White House has acknowledged that Enron representatives met six times with Vice President Dick Cheney or his aides on energy issues last year, most recently in mid-October just before the investing public realized the company was heading for disaster.
The vice president's office said the last Enron meeting with a Cheney aide was Oct. 10, just six days before the first in a series of public admissions by the company about its true financial condition that sent it careening into bankruptcy court.
Enron's financial position wasn't discussed in any of the meetings, vice presidential counsel David Addington insisted in a letter.
On Wednesday, White House spokesman Ari Fleischer told reporters: "I'm not aware of anybody in the White House who discussed Enron's financial situation."
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