Andersen's Duncan Won't Testify (Yet); Enron's Lay Resigns
Fired Andersen partner David Duncan, the lead auditor on the Enron engagement, is scheduled to testify today before the House Energy & Commerce Committee. Although Mr. Duncan has expressed a desire to cooperate with all Enron-related investigations, he has indicated he plans to invoke the Fifth Amendment and refuse to testify unless he is given immunity.
Representative Billy Tauzin, R-LA, chairman of the House committee, has asked the U.S. Justice Department to authorize immunity for Mr. Duncan, but as yet no agreement has been reached regarding this issue. "I will not provide immunity to anyone without consent of the Justice Department who is doing a criminal investigation," said Rep. Tauzin.
Mr. Duncan's attorney, Robert Giuffra, said, "Mr. Duncan will testify on January 24 if the committee votes to grant him immunity."
Ken Johnson, spokesman for Representative Tauzin, indicated that Mr. Duncan may be held in contempt if he refuses to testify. "If he [Duncan] thumbs his nose at us, then we'll consider our options, including contempt of Congress," said Mr. Johnson.
Enron's Leader Steps Down
Kenneth Lay, chairman and chief executive officer of the battered Enron Corp. has announced his resignation from the company.
The company's board is in the process of selecting a restructuring specialist who will serve as acting chief executive officer.
Mr. Lay indicated that the distraction from inquiries and investigations into the activities of the company that led to the largest bankruptcy in U.S. history is preventing him from concentrating fully on serving Enron and its shareholders.
"I want to see Enron survive, and for that to happen we need someone at the helm who can focus 100% of his efforts on reorganizing the company and preserving value for our creditors and hard-working employees," said Mr. Lay.
Mr. Lay will keep his position as a member of Enron's board of directors.
Meanwhile, the FBI raided Enron headquarters Tuesday, looking for evidence that incriminating documents were being destroyed. The FBI left with boxes of shredded documents.
Enron's Tax Returns Questioned
The Citizens for Tax Justice, a watchdog group, has released information from Enron's income tax returns from the past five years.
The tax returns show that, although Enron was profitable in all of the past five years, the company received a net tax rebate of $381 million for those five years, including $278 million in 2000.
The company saved money on taxes by using the tax benefits available to companies who issue stock options. Federal tax law permits companies to take a deduction for the difference between the option price and the market price of company stock at the time the options are exercised.
In addition, Citizens for Tax Justice noted that Enron created more than 800 subsidiaries in tax-friendly locations, including the Cayman Islands.