Bush backs full Enron probe

Herald Sun ^ | 1/17/02 | AFP

[kattracks]

WASHINGTON: President George W Bush backs a full investigation into the widening Enron-Arthur Andersen scandal, including prison sentences for those found guilty of wrongdoing in the debacle, the White House says.

"The president thinks that it is vital for the Department of Justice to pursue this wherever it goes, to whoever it goes and to do whatever it takes to investigate any criminal wrongdoing," White House spokesman Ari Fleischer said today.

"If, as a result of that, anybody ends up with a prison sentence, that is the American system of justice and that is proper and that is the way it should work, and that is what the president wants to see pursued."

The statement comes as congressional lawmakers deepen their investigation into the bankruptcy of the energy titan and questionable procedures by its accounting firm Arthur Andersen.

Fired Arthur Andersen lead partner David Duncan on Wednesday was expected to cooperate with congressional investigators, providing them with information on the debacle.

"It's quite possible (Duncan) may be a little more cooperative" during a closed-door meeting with members of the House Energy and Commerce Committee, press spokesman Pete Sheffield said.

"Hopefully it will be a productive session."

Duncan was dismissed from the top-ranking accounting firm after admitting he had destroyed masses of Enron-related documents after hearing regulators wanted the information.

Enron filed for bankruptcy on December 2 -- the biggest corporate failure in US history. Many Enron staff had their pensions in company shares and lost their life savings.

Congressional committees have jumped all over the case, opening a number of investigations into activities by both Enron and Arthur Andersen.

For over a decade Enron has been a major contributor to US politicians both Democrat and Republican, and among those benefitting most was US President George W Bush, who received $US623,000($A1.21 million) from Enron since launching his political career in 1993, according to news reports in Washington.

The scandal breaks just 10 months from the next round of congressional elections -- but gleeful Democrats will have to tread lightly around Bush who has widespread popular support, analysts warn.

"It can't look like the Democrats are going after Bush, particularly given Bush's public standing," American University professor Allan Lichtman told AFP.

Even Democrat Senator Joe Lieberman, one of the top lawmakers investigating the Enron collapse, has been cautious about drawing conclusions.

"There is clearly a corporate scandal. Whether there is a government scandal remains to be seen," he said Sunday.

But clearly on the defensive, Bush administration officials have acknowledged they knew about Enron's financial difficulties. Both Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans have said they were contacted in late October by Enron chief executive Kenneth Lay.

O'Neill said he had opted not to tell Bush of the company's problems.

Meanwhile US Attorney General John Ashcroft recused himself from the Enron case last Thursday, the day he received a letter from Representative Henry Waxman asking him about some $US50,000($A96,918) that had gone to groups affiliated with Ashcroft by Enron-related individuals, according to the National Legal and Policy Center here.

NLPC President Peter Flaherty has asked that Lieberman also recuse himself from the case, according to a letter he sent the senator that was released to the media.

"Enron contributed a total of $US25,000($A48,460) in 2000 to the group you founded," the letter said.

Energy titan Enron, which until recently was among the top 10 US companies with annual profits of some $US100 billion($A194 billion), revealed large losses in October and the next month admitted it had overstated earnings by nearly $US600 million ($A1.16 billion) since 1997.

It also overstated its equity base by 1.2 billion dollars.