Accounting for Enron: Obstruction Charges Likely to Be First Step in Enron Criminal Case
The Wall Street Journal, 01/28/2002

ENRON'S MANY STRANDS: EARLY SCRUTINY
10 Months Ago, Questions on Enron Came and Went With Little Notice
The New York Times, 01/28/2002

A Fog Over Enron, And the Legal Landscape
The New York Times, 01/27/2002

ENRON'S MANY STRANDS: THE PROSECUTOR
Noted Brooklyn Prosecutor Joins U.S. Inquiry Into Enron Collapse
The New York Times, 01/28/2002

THE FALLOF ENRON Convictions for Enron Execs Would Be Hard Won
Los Angeles Times, 01/28/2002

Building the House of Enron: As Enron's Derivatives Trading Comes Into Focus, Gap in Oversight Is Spotlighted
The Wall Street Journal, 01/28/2002

ENRON'S MANY STRANDS: SEEKING EVIDENCE
Hard-to-Miss Box of Scraps Catches F.B.I. Agent's Eye
The New York Times, 01/28/2002

ENRON'S MANY STRANDS: LEGAL STRATEGY
SHREDDED PAPERS KEY IN ENRON CASE
The New York Times, 01/28/2002

ENRON'S MANY STRANDS: THE VICE PRESIDENT
Cheney Is Set to Battle Congress To Keep His Enron Talks Secret
The New York Times, 01/28/2002

Enron and the Lawyers
The New York Times, 01/28/2002

Enron Case Attracts Lawyers Like a Flame Attracts Moths, More Than You Can Shake a Stick at
The Washington Post, 01/28/2002

Greed, Pain, Excesses. Oh, What a Lovely Issue.
The New York Times, 01/27/2002

How a Top Medical Researcher Became Entangled With Enron
The New York Times, 01/28/2002

While Enron's future is uncertain, its trademarked name could live on for a decade.
The New York Times, 01/28/2002

A Suicide and a Resignation as the Formal Inquiries Get Under Way
The New York Times, 01/27/2002

Police Probe Ex-Enron Executive's Death --- Baxter, an Apparent Suicide, Worked to Sell Assets Of Energy-Trading Firm
The Wall Street Journal, 01/28/2002

ENRON'S MANY STRANDS: THE SUICIDE
Despite His Qualms, Scandal Engulfed Executive
The New York Times, 01/27/2002

The Astros Should Give Some of the Money Back
The New York Times, 01/27/2002

Planet Of the Privileged
The New York Times, 01/27/2002

I Am Woman, Hear Me Roar in the Enron Scandal
The New York Times, 01/27/2002

Private Enterprise, Public Outrage
Los Angeles Times, 01/28/2002

_____________________________________________________________________


Accounting for Enron: Obstruction Charges Likely to Be First Step in Enron Criminal Case
By Wall Street Journal staff reporters Richard B. Schmitt, Gary Fields and John R. Wilke

01/28/2002
The Wall Street Journal
A6
(Copyright (c) 2002, Dow Jones & Company, Inc.)

WASHINGTON -- Federal prosecutors likely would file obstruction-of-justice charges first in any criminal case arising from the collapse of Enron Corp., as they look to build a broader indictment based on possible securities fraud, insider trading and tax fraud, lawyers close to the case said. 
Obstruction charges, including any allegations of deliberate destruction of evidence, could come as soon as this summer and likely would be filed in federal court in Houston, these lawyers said. Such initial criminal charges could provide prosecutors with powerful leverage against defendants whose cooperation might then be sought to pursue any inquiry into any underlying crimes, these people said.
Enron's spectacular collapse last month triggered more than a dozen civil, criminal and congressional investigations and already has had significant political repercussions. But for officers and executives of the Houston-based energy-trading company and its former auditor, Arthur Andersen LLP, the stakes are highest in the Justice Department's wide-ranging criminal investigation. 
One crucial factor for these men and women could be the dates that any alleged obstruction and fraud occurred. Penalties for most federal white-collar crimes were stiffened Nov. 1, in some cases nearly doubling prison sentences and fines. 
A senior Justice Department official refused Friday to discuss possible charges or other details of the case, except to confirm that it could unfold relatively quickly. Others close to the case cautioned, though, that with investigators still grappling to determine just what happened, few firm decisions have been made about legal tactics or where initial charges should be filed. 
An attorney for Enron said discussion of criminal charges against the company is premature. The company has been cooperating with federal investigators looking into document shredding by its employees, and a report by a special committee of Enron's board looking into the debacle is expected out soon, possibly this week. 
"I think it is grossly unfair to draw any conclusions at this early stage. There is no evidence at all, at least on the part of Enron, that any shredding of documents was criminal in any way. I think before anybody rushes to judgment, they should see what the FBI concludes," said Robert Bennett, an Enron attorney here. 
"This board of directors is trying very hard to reorganize this company, and bring it out of bankruptcy so stakeholders can get paid back and so 20,000 employees can keep their jobs," he added. 
In any event, prosecutors face enormous hurdles. Complex white-collar crime cases can take months, if not years, to untangle, and figuring out what occurred at Enron -- with its hundreds of offshore companies and affiliates allegedly set up to sweep debt from Enron's books and juggle tax liabilities -- could prove especially difficult. At the same time, proving criminal intent in such cases can be tough, and often must be established with circumstantial evidence; what's more, defendants in such cases sometimes argue that they reasonably relied on the advice of lawyers in their actions and decisions, which can make it difficult to establish criminal intent. 
Auditors and lawyers in such cases rarely face prosecution. But Arthur Andersen and Vinson & Elkins, Enron's longtime legal counsel, have been sharply criticized for failing to probe more deeply into concerns about possible fraud. Arthur Andersen or its employees, in particular, could be liable if they knowingly destroyed evidence. A Vinson & Elkins spokesman said the firm's work for Enron met "the highest professional and ethical standards." An Arthur Andersen spokesman said the firm is cooperating in the probe, and noted that it had volunteered information to investigators about the destruction of documents. "We are not speculating on outcomes," the spokesman said. "We are focused on helping them to do their jobs." 
While the investigations are still in their infancy, with new and startling facts emerging almost daily, some defense lawyers and former prosecutors say they wouldn't be surprised if the Justice Department brought initial criminal charges as soon as the summer. 
The government's roadmap in such cases often includes early charges of obstruction for making false statements or destroying evidence. Obstruction charges are relatively straightforward; prosecutors don't have to prove a defendant was involved in any underlying crime, only that he or she lied, destroyed evidence or otherwise hindered prosecutors. And such defendants -- who can face prison time -- often end up being valuable witnesses in guiding investigators through the morass as they attempt to build a broader case. 
"The government loves the obstruction angle," said James Volling, head of the business-litigation group at Minneapolis's Faegre & Benson law firm. "It doesn't come with all the baggage that securities claims often do. It is pretty easy to establish the facts. That is something they clearly will pursue." 
Beyond initial obstruction charges in the Enron matter, "there is a smorgasbord of potential criminal charges," said Henry Hockeimer, a Philadelphia defense lawyer and former federal prosecutor. Already, shareholders have filed civil suits alleging that Enron officers violated securities laws by not disclosing material information about circuitous, off-balance-sheet partnership arrangements. They also have alleged that company officers sold more than $1 billion of Enron stock using inside information that should have been disclosed to the public. 
The same allegations could form the basis of criminal securities-fraud and insider-trading charges if the government thinks it can prove the officers acted while knowing what they were doing was wrong, or were warned and went ahead anyway. Other possible claims include mail and wire fraud, and even violations of the federal bank-fraud statute, if Enron or its officers kept material information from its lenders. 
The timing of specific acts could be an issue if charges are proven in court because sentencing guidelines on hundreds of white-collar crimes got more severe Nov. 1. For example, the maximum penalty for the basic crime of insider trading or fraud in excess of $1 million has nearly doubled, from 37 months in prison to 63 months. Enron is the first major white-collar crime investigation since the new guidelines became effective. 
According to federal sentencing commission statistics, about 10,000 people were sentenced to federal prison for financial crimes in 2000. If the new guidelines had been in place, a third of them would have received more prison time and those sentences would have been an average of 40% longer. 
--- 
Question of the Day: What will be the biggest fallout from the Enron disclosures? Visit WSJ.com/Question to vote.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section A
ENRON'S MANY STRANDS: EARLY SCRUTINY
10 Months Ago, Questions on Enron Came and Went With Little Notice
By FELICITY BARRINGER

01/28/2002
The New York Times
Page 11, Column 1
c. 2002 New York Times Company

A paramount virtue in journalism is being the first to reveal startling facts. Editors notice. Colleagues notice. Competitors notice. 
Except when they do not.
Ten months ago, Bethany McLean of Fortune magazine became the first journalist to highlight hard questions about Enron's balance sheet. The most startling fact she revealed was the absence of crucial information in the company's financial reports. ''How exactly does Enron make its money?'' she wrote. 
Her questions were so pointed that Enron's chief executive, Jeffrey K. Skilling, called her unethical for failing to do more research. Three Enron executives flew to New York in an unsuccessful effort to convince her editors that she was wrongheaded. Enron's chairman, Kenneth L. Lay, called Fortune's managing editor, Rik Kirkland, to complain that Fortune was relying on a source who stood to profit if the share price fell. 
The lobbying by Enron had no effect on what Fortune published, highlighted on its cover with the headline, ''Is Enron Overpriced?'' Then inertia did what corporate pressure could not do -- it buried the article. Only TheStreet.com picked it up and peppered Enron with critical reporting. 
Even Ms. McLean left leads that were not pursued. She knew, she said, that Enron's chief financial officer, Andrew S. Fastow, was a principal in two partnerships alluded to in the financial statements. But she left it out of her article. 
''I knew it was weird, but the accountants had signed off on it,'' she said. If the accountants, Arthur Andersen, and Enron's board had not questioned it, she reasoned, why should she? Not until October did The Wall Street Journal link Mr. Fastow's partnerships to Enron's write-off of $1.2 billion in shareholder equity. 
As Mr. Kirkland said, Ms. McLean's report ''was prescient, but it kind of went out and sank.'' 
''We didn't have the goods, as it were,'' Mr. Kirkland said. Only last fall, when Enron began to collapse, did more reporters pay attention to the article and to its author. Ms. McLean herself has returned to reporting on Enron. 
Ms. McLean, who is 31, is now the financial reporter everyone loves to lionize. Her photogenic smile and the analytical ability honed at Goldman, Sachs have won her appearances on PBS's ''NewsHour With Jim Lehrer,'' CNN's ''Greenfield at Large'' with Jeff Greenfield, and two NBC News shows. NBC, Fortune executives said, has offered her a consulting contract. 
The arc of Ms. McLean's experience with Enron illustrates the dynamics of financial journalism, which tends to be sucked into the gravitational pull of the stock markets. Companies with highflying stocks tend to get positive coverage; those whose stocks slide tend to provoke critical assessments. 
Other magazines like Business Week and even Fortune had written glowing accounts of Enron's transformative effect on energy markets, and the trajectory of its stock price, which rose about 50 percent in 1999 and about 90 percent in 2000. As Ms. McLean was working on her article, in the midst of the California power crisis, Business Week published a cover article entitled: ''Enron, the nation's largest energy merchant, won't let California stand in its way.'' 
But as the share price rose, Enron's financial reports stayed opaque. One would almost have to have written them to understand them. And few financial reporters have written corporate financial reports. 
Ms. McLean is part of that small group. For three years after she graduated from Williams College with a double major in math and English, she worked for investment banking division of Goldman, Sachs. ''You work literally 100 hours a week, sitting at your computer doing a lot of calculating, a lot of spread sheets,'' she said on Friday. 
She would review the books of companies being offered for sale and write memorandums describing their virtues and faults. ''I learned,'' she said, ''that numbers can lie.'' 
She also had an epiphany about accounting and its potential for abuse. ''When you come out of a liberal arts background,'' she said, ''you want to know why something is the way it is.'' In accounting, ''there is no reason why. There is no fundamental truth underlying it. It's just based on rules.'' 
''These rules create an incentive to get around rules,'' she said. ''This means getting away from any accounting portraying the fundamental economic reality of a company.'' 
Ms. McLean had never practiced journalism. But after three years at Goldman, in a culture where she was never comfortable, she decided to send her resume to several newspapers. She had no takers. Then a friend sent her resume to Fortune. There, she joined its corps of fact-checkers, soon becoming famous for giving no quarter. 
The fame stemmed from her tug of war with Andrew S. Grove, then the chief executive of Intel. He had written an article about how he had decided among possible treatments for his prostate cancer. Ms. McLean, then 25, challenged him on his data. And she was right. Both agree on this, though neither remembers the exact details. ''She did a super job,'' Mr. Grove wrote in an e-mail message last week. ''She was a royal pain but not one person subsequently challenged any facts in my article.'' Later he sought her out to thank her. 
The incident brought her to the attention of John Huey, then the magazine's managing editor. Ms. McLean was promoted and slowly mastered the writing side of the business (paying her editors back for their labors by regularly beating them at pool). 
Five years later, she was tackling Enron, nervously. She had felt indirectly rebuked when her earlier critical financial analysis of I.B.M.'s earnings had no effect on investors or I.B.M.'s share price. Remembering how her judgment had not been validated, she was afraid Mr. Skilling, the Enron chief executive, was right when he implied she had failed to do the work required to understand Enron's financials. 
But events proved him to be wrong. He was not wrong, however, when he told her that similar questions were being asked ''by people who want to throw rocks at the company.'' The first person to flag Ms. McLean to the odd financial statements had been someone who had bet against Enron stock. 
Almost all the reporting on the company at that point was favorable. As James S. Chanos, a short seller who is president of Kynikos Associates, a hedge fund in New York, said in a recent interview, ''The stock price conveys legitimacy.'' 
Short sellers like Mr. Chanos, who pointed Ms. McLean toward Enron, are among the few skeptics in a business where most interest groups -- analysts, investment bankers, shareholders and executives -- profit from a bull market. 
Ms. McLean went on to report about soy milk and Prozac, not Enron. ''The next line of reporting wasn't clear,'' she said. 
But Peter Eavis of TheStreet.com continued to question the valuation of Enron's investment portfolio. Last summer, he reported investor uncertainty about ''how much Enron's earnings have been aided by deals'' by entities like ''LJM Capital Management, whose general partner is Enron's chief finance officer, Andrew Fastow.'' Even the revelation of Mr. Fastow's dual loyalties provoked little attention. 
Maybe, as Mark Roberts, the research director of Off Wall Street Consulting in Cambridge, Mass., said, ''The whole thing was so opaque and so difficult to conceive and so well hidden that it was just beyond the tools of journalists.'' 
Certainly, after the Sept. 11 terrorist attacks, journalists were distracted. But, in the following weeks, investors were not. As Enron's stock price kept declining, they asked more questions like Ms. McLean's, and they did not like the answers. ''What led to all the revelations and the beginning of the end,'' Mr. Roberts said, ''was a crisis of confidence. 
Ms. McLean is unsure what lessons journalists will learn from covering Enron. ''If we all are more cynical about companies and know that accountants can't be trusted and boards can't be trusted, is that a good thing?'' she asked.

Photos: Bethany McLean became the first journalist to ask questions about Enron's finances in an article, ''Is Enron Overpriced?'' in Fortune magazine. (Frances Roberts for The New York Times) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Money and Business/Financial Desk; Section 3
A Fog Over Enron, And the Legal Landscape
By DIANA B. HENRIQUES with KURT EICHENWALD

01/27/2002
The New York Times
Page 1, Column 3
c. 2002 New York Times Company

''ROTTEN.'' ''Horrible.'' ''Indefensible.'' ''Shocking.'' 
With those words, securities law experts around the country condemned the way Enron had structured and sold a partnership called LJM2, which offered investors a chance to profit from confidential information about Enron's investment plans -- and gave the partnership investors more information about the company's finances than Enron's shareholders received.
''This is potentially the most serious revelation about Enron to date,'' said Joel Seligman, a securities law historian and dean of the Washington University Law School. ''You can't overstate how shocking it is.'' 
But did the arrangement, however unfair it seems to stockholders, actually violate the nation's securities laws and regulations? That is far more difficult to answer, legal scholars say -- and far more important. For them, the fundamental question about the sprawling Enron scandal is whether it is a case of strong laws being violated by bad people, or of weak laws rendering such violations unnecessary. 
''If a company of this size, advised by top-tier accountants and law firms, could conclude that our laws permit some of what happened here, then our laws are inadequate,'' said Richard C. Breeden, a former chairman of the Securities and Exchange Commission. ''Clearly it violates the spirit and intent of securities laws and the whole concept of full and fair disclosure.'' 
The quandary is particularly acute in the case of this partnership, because it seemed to thrive on arrangements -- procedural barriers known as ''Chinese walls'' -- that were actually intended to protect investors. These legal barriers prevented investment bankers who were privy to information about the partnership from legally sharing that information with shareholders. Instead, investors remained in the dark about Enron's actual financial condition. 
But the partnership, lawyers and finance experts say, raises novel questions about the effectiveness of other parts of the securities laws, as well. These include prohibitions against trading on inside information; rules against selectively disclosing information to some shareholders and not others; efforts to police corporate conflicts of interest and the wisdom of removing restrictions on the roles that investment banks can play. 
''No matter how good you make the laws, there will always be a small group of people who will push them,'' said John Pound, a former finance professor at Harvard and the president of Integrity Partners, an investment management firm in Boston. ''But the Enron case has raised a lot of useful and important policy questions that will need to be addressed. And the Chinese-wall issue is a perfect example of that.'' 
ENRON'S swift fall, culminating in its bankruptcy filing in early December, came after the company revised its past financial statements to more accurately reflect partnership deals like the LJM2 arrangement. The company and its auditor, Arthur Andersen, are the subjects of both criminal and regulatory investigations, and are being examined by nearly a dozen Congressional committees. 
One important focus of those investigations is the way that partnerships like LJM2 contributed to the company's collapse. Confidential records of that specific partnership, disclosed in The New York Times on Friday, show that Enron tried to attract investors by dangling the prospect of potentially remarkable returns, driven by access to inside information about Enron's financial dealings. 
Potential investors were told, in detail, about the company's off-the-books transactions and assets, information that Enron had not disclosed to its public shareholders. Indeed, partnership investors knew that Enron controlled at least 50 percent more assets than the company had disclosed in its audited financial statements, filed with the S.E.C. and provided to public shareholders. 
That lopsided flow of information strikes many legal experts as a direct challenge to traditional thinking about Chinese walls, the common nickname for the procedures that assure that the confidential information Wall Street firms obtain from their corporate investment banking clients remains confidential, even within the firm itself. 
Chinese walls came into being in the late 1960's, as a regulatory response to the increased complexity of Wall Street firms and a more vigorous S.E.C. response to insider trading, said Michael A. Perino, a securities law professor at St. John's University. 
Their purpose, quite simply, was to prevent an investment banker from using confidential information about a corporate client to make trades in that client's stock -- trades in which the banker would have an advantage over other investors. 
In 1988, at the end of a decade punctuated by insider trading scandals, Congress made such ''informational partitions'' mandatory, citing the need to prevent Wall Street insiders from taking advantage of Main Street investors. 
But in this case, it appears that the protection backfired, legal experts said. Investment bankers who worked on the Enron partnerships were privy to information that may have raised doubts about the information Enron had provided to public investors -- but they were forbidden by law from raising any red flags. 
''The purpose of the Chinese wall is to help public investors, but this worked backwards,'' said Mr. Pound, the former Harvard professor. ''What amazes me is that the people who knew they had information adverse to the public investors would not feel a need to find a way, within the institution, to address that issue -- to go up in the institution high enough to say, 'We have a policy problem here.' '' 
The LJM2 partnership points up Chinese-wall problems that courts and regulators have been struggling to resolve for years, said John C. Coffee Jr., a securities law expert at Columbia University Law School. 
If the investment banking divisions of a brokerage firm had information that raised questions about the value of a public company's stock, there is nothing under the current law that the bankers could do to help the firm's retail investors. But there are more limited actions the firm could take, Mr. Coffee said. 
''They can't go out and privately tell their clients the full information they have received without being part of an insider trading scheme,'' Mr. Coffee said. ''But they could arguably use the information to withdraw their recommendation on the stock.'' That, he added, ''will cause some consternation and adverse publicity that would alert the market to a problem.'' 
OTHER legal experts worry that the investment banks dealing with Enron were constrained by conflicts between their role as lenders and their work as underwriters. 
This conflict, too, has roots deep in American financial history. In the decade before the 1929 crash, banks would sometimes help a failing company sell stock to the bank's customers to raise money to repay the bank's loans. As part of the New Deal, Congress passed the Glass-Steagall Act, which prevented banks from providing both underwriting and traditional banking services. 
But long before Congress officially repealed Glass-Steagall in 1999, both banks and Wall Street firms found legal detours around the prohibition. Now, some securities law experts said, Congress may need to take a fresh look at whether these dual roles in any way affected the flow of significant information to public investors in Enron. 
One specialist in corporate law, who spoke on condition of anonymity because his firm is an Enron creditor, said, ''In a case like this, this perverse effect should be discussed at the very highest levels in the firm.'' 
Mr. Breeden, the former S.E.C. chairman, said no direct parallels to the classic pre-1929 conflicts have appeared. But Enron's evolution ''was a very subtle situation, and very complex,'' he said. 
''In any case,'' he added, ''the public should be able to conclude where the investment banks' greatest interests lie.'' 
That investors in the LJM2 partnership apparently got information that public investors could not get -- because Enron had moved certain operations off its balance sheet -- also underscores the importance of preventing selective disclosure by corporations, one former S.E.C. commissioner said. 
Until last January, corporate executives would routinely hold private briefings for analysts, slipping them details that were not available to public investors. To ''level the playing field,'' the S.E.C. enacted Regulation FD, which forbids such selective disclosure. 
It is not clear from available documents whether partnership investors continued to learn about Enron's finances after the new rule went into effect. ''But if they did, that raises blazing questions of selective disclosure,'' the former commissioner said. More broadly, he said, regulators should determine whether other corporations that use off-balance-sheet entities are giving investors in those entities more information than public stockholders receive. 
SHELDON ELSEN, a securities lawyer at Orans Elsen & Lupert in New York, said the structure of the LJM2 partnership ''really presents some very troubling problems.'' 
''I don't know that there is anything illegal here,'' Mr. Elsen said, ''but there is a terrible odor about it.'' 
James Moriarty, a Houston lawyer who has represented plaintiffs in a number of securities fraud cases, said: ''That they would tell the truth to the rich investors, and lie to their stockholders, is outside the realm of the comprehensible.'' 
Enron might argue that the information potential partnership investors got was not important enough to require disclosure. But lawyers said the fact that Enron disclosed the information to them at all would be evidence in itself that such details were material. 
''Given that they give the information to somebody else as part of their bargain to raise money for another deal, there is a strong likelihood that it would reach the materiality level,'' said Stanley Arkin, a corporate and securities lawyer in New York. 
But the information gap between partnership investors and public stockholders is just one of the conflicts that litter the Enron battlefield, legal experts say. 
Congress is already wrestling with the potential conflicts that confront outside accounting firms, like Arthur Andersen. The firms act both as independent auditors -- which companies must have, by federal law -- and consultants on tax and technology issues. 
But that, too, just scratches the surface. The LJM2 partnership, like several others set up by Enron, was run by a general partnership, LJM2 Capital Partners, and managed by a second partnership, LJM2 Capital Management. The people behind both partnerships -- the ''principals'' -- were all Enron executives, including Andrew S. Fastow, Enron's chief financial officer, and Michael J. Kopper, managing director at Enron's global equity markets group. 
''Investors should be aware that there will be occasions where the general partner and its affiliates may encounter potential conflicts of interest in connection with the partnership's activities,'' the partnership sales documents said. It explained that the principals ''are employees at Enron and owe fiduciary duties to Enron and its subsidiaries; such fiduciary duties may from time to time conflict with fiduciary duties owed to the partnership and its partners.'' 
Enron's board specifically approved Mr. Fastow's role by exempting him from the corporate conflict-of-interest policy -- a step that Mr. Breeden found inexplicable. 
''The very notion that the chief financial officer of a major corporation could have divided loyalties to this degree of magnitude is something I wouldn't have believed any board of directors would allow -- or that any C.F.O. would accept,'' Mr. Breeden said. ''The C.F.O. is the financial conscience of the company, the guardian of the numbers. If he has a conflict, how can the system work?'' 
HE proposed requiring that when any corporate board or chief financial officer approves a conflict exemption, that action must be reported immediately to the S.E.C., and thus to the public. 
What is known about Enron's partnership arrangements so far, he said, reveals an even more profound conflict between management and shareholders. Because Enron had guaranteed the solvency of certain partnerships, obligations that were not disclosed on its balance sheet were secretly but steadily eroding its financial health. 
''It is as if Enron and its top officers had set up a loaded machine gun and aimed it at the company -- and the shareholders didn't know it,'' Mr. Breeden said. 
With so much turmoil still surrounding the investigation -- and with so much uncertainty about exactly what went wrong -- few legal scholars are willing to predict exactly what steps lawmakers and regulators may take to prevent the next Enron. 
But two things seem certain, they said. 
The first is that these fresh disclosures about how Enron's partnerships were structured and sold will expand the number of defendants named in the shareholder lawsuits aimed at trying to recover some of investors' market losses, which have been estimated at more than $60 billion. 
Every large institution -- whether an underwriter or partnership investor -- that was aware of material information withheld from Enron investors could find itself in court, securities lawyers said. Already, they said, lawyers who specialize in suing corporations are discussing which investors, institutions and advisers are potential defendants. 
''The image I have in my mind is a long, long line of the wealthy and the powerful who made money out of these deals, all set up to hand it over to the people who lost everything in their Enron investments,'' said Mr. Moriarty, the Houston lawyer. ''This is what the Marines like to call a target-rich environment.'' 
The second consequence is likely to be systematic Congressional action to amend the nation's securities laws, said Mr. Seligman, the law school dean and regulatory historian. 
The securities laws enacted in the New Deal were ''a response to the general public belief, after the 1929 crash, that there were two securities markets -- one for privileged insiders and one for everyone else,'' Mr. Seligman said. Enron's LJM2 partnership ''smacks of that world,'' he added. And when the American public believes two such markets exist, he said, ''Congress -- every time, regardless of party or president -- has acted to address that concern.''

Photos: The Enron towers in Houston. Scholars say the company's actions raise troubling questions about securities regulations in general. (James Estrin/The New York Times)(pg. 1); An excerpt from a document on Enron's LJM2 partnership. The partnership offered investors a chance to profit from internal information -- not available to stockholders -- about Enron's investment plans.; Joel Seligman, above, dean of the Washington University Law School, and Richard C. Breeden, left, a former chairman of the Securities and Exchange Commission, say revelations about an Enron partnership are likely to lead to action by Congress. (Marilynn K. Yee/The New York Times)(pg. 13) Drawing (The New York Times/Illustrations by Christophe Vorlet)(pg. 13) Chart: ''Legal Review'' The business activities of Enron -- from the way it structured and sold some private partnerships to what it did and did not disclose to various parties -- raise questions about some basic protections of American securities law. Among the issues that must now be reassessed are these: ''Chinese wall''requirements The information that Wall Street firms receive while working as investment bankers for public companies may not be shared with other parts of the firm that trade or sell those companies' stocks. Conflict-of-interest policies Companies must inform investors about important conflicts of interest that arise in the course of business operations. Insider-trading bans People who obtain important confidential information about a company may not use it to trade the company's stock if doing so would violate their legal obligations to other investors or to the source of the information. Selective disclosure rules Since last January, companies have been barred from providing important information to some investors but not to others. The Glass-Steagall Act Until its repeal in 1999, Wall Street firms were barred from serving both as traditional bankers, making loans, and as underwriters, selling stock. (pg. 13) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section A
ENRON'S MANY STRANDS: THE PROSECUTOR
Noted Brooklyn Prosecutor Joins U.S. Inquiry Into Enron Collapse
By PHILIP SHENON

01/28/2002
The New York Times
Page 10, Column 3
c. 2002 New York Times Company

WASHINGTON, Jan. 27 -- The Justice Department has named a leading organized-crime prosecutor from New York to its investigation of the collapse of the Enron Corporation, department officials said. 
The prosecutor, Andrew Weissmann, chief of the criminal division of the United States attorney's office in Brooklyn and the lead prosecutor in the 1997 trial that ended with the imprisonment of the reputed head of the Genovese crime family, is described by colleagues as a tenacious investigator and litigator.
Department officials said they hoped the appointment of Mr. Weissmann would be seen as additional evidence that the Justice Department's Enron inquiry would be aggressive, despite the many ties between the Bush administration and senior Enron executives who were among the largest contributors to President Bush's 2000 campaign. 
Attorney General John Ashcroft has recused himself from the case because he accepted contributions from Enron in a failed campaign for re-election to the Senate. 
Mr. Weissmann will report to Leslie R. Caldwell, a career federal prosecutor in the United States attorney's office in San Francisco who has been named to head the Enron investigation. Ms. Caldwell, chief of the securities fraud division in the prosecutor's office in San Francisco, has a reputation for toughness and for helping juries make sense of complicated criminal cases. 
Mr. Weissmann, 42, has handled a variety of cases in Brooklyn but is best remembered for his prosecution of organized-crime figures, most notably Vincent Gigante, the reputed head of the Genovese crime family. 
Mr. Weissmann won a 1997 conviction of Mr. Gigante on charges of murder-conspiracy and racketeering, overcoming defense claims that Mr. Gigante was incompetent to stand trial. Mr. Gigante was known for walking around Greenwich Village in a bathrobe and pajamas, which resulted in his being dubbed the Oddfather. 
Mr. Weissmann, a graduate of Princeton University and Columbia Law School, was born and raised in New York. He has worked in the United States attorney's office in Brooklyn for 10 years, the last two as chief of the criminal division.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Financial Desk
THE FALLOF ENRON Convictions for Enron Execs Would Be Hard Won
ERIC LICHTBLAU; DAVID G. SAVAGE
TIMES STAFF WRITERS

01/28/2002
Los Angeles Times
Home Edition
A-1
Copyright 2002 / The Times Mirror Company

WASHINGTON -- Although Enron Corp. may have destroyed thousands of documents, misled shareholders and left the retirement accounts of many of its employees nearly worthless, legal experts say the prospect of serious criminal convictions of corporate executives is far from certain. 
Despite some recent success in corporate fraud cases, prosecutors must overcome daunting hurdles, including changes in federal regulation of insider trading, the vagaries of securities law and the sometimes conflicting agenda of congressional investigators, according to law professors, attorneys who specialize in white-collar crime and law enforcement officials.
Evidence that Enron destroyed documents related to the company's meteoric collapse offers the most compelling prospect for a criminal case, suggesting possible obstruction of justice charges, legal experts and law enforcement officials agree. 
But it could take years for authorities to build more serious charges of conspiracy, insider trading or securities fraud against Enron's higher-ups, and even then it may prove tough to return convictions, experts predicted. 
"Financial fraud cases are very hard to prove. [Executives] can say they made bad business judgments, but you have to prove unanimously and beyond a reasonable doubt that they deliberately intended to deceive" the public and their shareholders about the company's finances, said Columbia University law professor Jeffrey N. Gordon. 
Even as FBI investigators began descending on Enron's Houston headquarters last week to probe possible crimes, they probably will confront several legal and political realities that could work to Enron's advantage. Among the potential roadblocks: 
* The entire U.S. attorney's office in Houston has pulled out of the investigation because too many prosecutors are related to Enron employees, forcing the Justice Department to create a special task force that must start from scratch in probing the energy company's labyrinth of partnerships. 
* Democrats already have called for an independent counsel to probe Enron's well-documented political connections to the Bush administration, but the demise of the outside counsel law in 1999 has muddied the process for determining how and when to appoint an outside counsel. 
* A recent rule change at the Securities and Exchange Commission, authorizing prearranged sell-offs of executives' stock, gives added insulation to allegations of insider trading and could provide former Enron Chairman and Chief Executive Kenneth L. Lay and other executives with a built-in defense. 
* And Congress' zeal to conduct high-profile hearings on Enron could complicate the use of testimony from witnesses who become part of the criminal probe, as happened in the Iran-Contra scandal. In that case, charges against Oliver L. North and John M. Poindexter were thrown out in 1990 because their prosecutions were deemed tainted by immunized congressional testimony. 
Coordinating Immunity Offers 
Justice Department officials have begun discussions with Congress on how to coordinate immunity offers that Congress might make to witnesses, such as David B. Duncan, the partner at accounting firm Andersen who oversaw the Enron account. Duncan, who since has been fired, invoked the 5th Amendment last week before a congressional committee rather than answer questions about the destruction of Enron documents. 
The department hopes to blunt the effect that any congressional immunity deals would have on future criminal cases. 
"We never like to see potential witnesses paraded before Congress, but that's always a danger in a case like this," acknowledged a law enforcement official who asked not to be identified. 
Enron spokesman Eric Thode said it would be premature to discuss any criminal allegations, noting: "We'll just let the investigations take their course, and, of course, we're cooperating fully." 
Despite the obstacles that prosecutors face, authorities are buoyed by the recent progress they have made in several other high-profile financial fraud cases. 
In Pennsylvania, the former chief financial officer of apparel maker Leslie Fay Cos. was sentenced last week to nine years in prison for inflating the company's earnings by $81 million. The scheme forced the company into Chapter 11 bankruptcy protection for four years. 
In San Francisco, former executives at health services giant McKesson Corp., are facing civil and criminal charges for allegedly concocting bogus revenue figures. The losses for the company's shareholders: $9 billion. 
And in New Jersey, in a case with even more telltale similarities to Enron, the former chairman and vice chairman of Cendant Corp.--a franchiser whose brands include Howard Johnson, Avis and Century 21--are awaiting trial on charges of conspiracy and securities fraud. 
Authorities allege that Cendant, in perhaps the longest-running scheme of its kind, was "cooking the books" for more than a decade, with former Chairman Walter A. Forbes reaping $30 million as the company's stock soared amid misleading financial reports. 
Once irregularities in the company's accounting were exposed in 1998, the value of Cendant's stock plunged $14 billion in a single day. 
Cendant and accounting giant Ernst & Young, accused of whitewashing the irregularities, agreed last year to pay a near-record total of $3.2 billion to shareholders who claimed they were defrauded by the scheme. 
But Forbes and former Vice Chairman E. Kirk Shelton, who have declared their innocence in the affair, are not expected to go to trial until late this year, about 4 1/2 years after the scandal first broke. That arduous legal path is testament to the difficulty of bringing such complex financial fraud cases, law enforcement officials say. 
"It's a brutally hard case," said one official close to the Cendant prosecution. "It takes a special accounting knowledge, it's an incredible paper trail, and you have to have cooperators. We had [three] people pleading guilty, all the ones just below the top. . . . Without them, it would be a much more formidable task" to prosecute the company's top executives. 
Reports of widespread shredding of Enron documents give authorities substantial leverage to try to persuade witnesses to cooperate, experts said. 
"As a prosecutor, you are looking for evidence that the senior people had knowledge of the scheme," said San Francisco attorney Stephen Meagher, a former prosecutor of white-collar crime cases. 
"And typically, when you find documents were being destroyed, that answers the question. That means certain people were aware of problems and they were determined to destroy the evidence. It's the prosecutor's dream come true because it shifts the burden to the other side. They have to explain what they were trying to hide." 
Duncan, the Andersen auditor, has spoken with federal investigators at least twice, a sign that he may be willing to cooperate in exchange for a plea deal. 
It remains to be seen whether Duncan or someone at Enron turns out to be the star witness prosecutors are seeking. But Columbia Law School professor John C. Coffee, a securities specialist, noted that "historically in white-collar crime cases, you have a trail of falling dominoes, and you start low and offer leniency to cooperate and get evidence against the higher-ups. I think you're going to get a whole succession of people cutting deals here." 
The danger, however, is that such witnesses have a potential credibility problem: If they admit to destroying documents, will a jury believe their testimony fingering higher executives? 
"Those aren't necessarily the most credible witnesses on the stand," said Paul Fishman, a former Justice Department official who specializes in white-collar defense. 
Sending a Strong Message 
Beyond the obstruction issue, law enforcement officials say possible charges against executives at Enron and Andersen could include securities fraud, insider trading, wire and mail fraud, conspiracy and even racketeering. 
The case, if it can be proved, would hinge on a simple premise: that executives fooled the public and its shareholders into thinking the company was more profitable than it was--and enriched themselves in the process as the company's stock went up in value. 
The corporation itself faces possible indictment and criminal penalties, but legal observers said anything short of indicting top Enron executives could be seen as a failure in the eyes of the public. 
"Indicting a bankrupt company achieves next to nothing," Coffee said. 
Indeed, Duke University law professor James D. Cox said indicting Enron executives would send a strong message. 
"If they are serious about eliminating financial fraud, this is the battle the government needs to take on," he said. "This looks to be a case of purposeful manipulation of earnings and purposeful concealment of debt. They created a truly false facade." 
Class-action lawsuits against Enron maintain that Lay made more than $100 million from stock sales before the company's value plummeted. But Lay's lawyers have maintained that many sales were from prearranged sell-offs, which could give him insulation under a rule adopted by the SEC in 2000 regarding what constitutes insider trading. 
The so-called 10b5-1 rule holds that even if insiders possess sensitive corporate information, they can legally buy and sell company stock so long as it is part of a prearranged trading plan. The SEC and various courts have wrangled over how the new rule should be interpreted, and allegations of insider trading against Lay and other Enron executives could prove "a key test," said Jill Fisch, a corporate and securities law expert at Fordham Law School. 
Fisch compared the Enron probe to the financial scandal that led to the conviction of former junk bond kingpin Michael Milken and other Wall Street traders in the 1980s. 
As in the Milken case, Fisch said, she believes Enron is "an impure case on a lot of legal questions." But, she added, the public backlash--fueled by headlines about document shredding--may be enough to drive the investigation in the absence of clear law.

PHOTO: Former Enron CEO Kenneth L. Lay and other executives face allegations of insider trading.; ; PHOTOGRAPHER: BRETT COOMER / For The Times; PHOTO: Andersen auditor David B. Duncan pleaded the Fifth last week before a congressional panel.; ; PHOTOGRAPHER: Associated Press 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Building the House of Enron: As Enron's Derivatives Trading Comes Into Focus, Gap in Oversight Is Spotlighted
By Michael Schroeder
Staff Reporter of The Wall Street Journal

01/28/2002
The Wall Street Journal
C1
(Copyright (c) 2002, Dow Jones & Company, Inc.)

WASHINGTON -- As the significant role that derivatives played in Enron Corp.'s downfall comes into focus, lawmakers and regulators are lining up in favor of more oversight of these risky investments. 
While the Houston-based company's core energy operations involved natural-gas and electricity transmission, its largest and most-profitable business was trading derivatives -- unregulated financial instruments that derive their value from an underlying commodity or wager on the future. Now, information is surfacing that Enron's derivatives trading may have been used to mask weakness in the company's other businesses such as fiber-optic bandwidth, retail gas and power, and water systems.
"Enron was more of a hedge fund than an energy company," said Rep. Richard Baker (R., La.), chairman of a Financial Services Committee panel that is looking into the derivatives issue, in an interview. 
After listening to testimony at his committee's Enron hearing last week, Senate Governmental Affairs Chairman Joseph Lieberman said he would hold a hearing specifically on the need for derivatives regulation. The Connecticut Democrat was responding in part to the testimony of San Diego University law professor Frank Partnoy, who outlined a series of methods that he said Enron used "to create false profit and loss entries for the derivatives Enron traded." 
To ensure that Enron met Wall Street quarterly earnings estimates, it used derivatives and off-balance-sheet partnerships, or so-called special-purpose vehicles, to hide losses on technology stocks and debts incurred to finance unprofitable businesses, Mr. Partnoy said. In addition, he said, "it appears that some Enron employees used dummy accounts and rigged valuation methodologies." The entries, he said, "were systematic and occurred over several years, beginning as early as 1997." 
Based on independent research and conversations with Enron traders, Mr. Partnoy said he learned that some traders apparently hid losses and understated profits, which had the effect of making derivatives trading appear less volatile than it was. Randall Dodd, director of the Derivatives Study Center, an independent, nonpartisan Washington group, said in an interview that he has reached similar conclusions. Mr. Dodd is advising three government agencies and three congressional committees investigating Enron. 
Declining to address specific allegations, Enron spokesman Vance Meyer said in a statement, "Derivatives were not our business. They complemented our core business of buying and selling natural gas and power." Mr. Meyer also said: "I think it's safe to say that we are not going to agree with every view about Enron presented in the congressional hearings, but we do respect the process and hope, when all is said and done, that something positive will come out of it." 
In 1989, the energy company, originally a utility that produced and transported natural gas and electricity, had begun shifting its focus to energy trading. The derivatives included not only Enron's very profitable trading operations in natural-gas derivatives, but also the more-esoteric financial instruments it began trading recently -- such as fiber-optic bandwidth and weather derivatives. 
During 2000 alone, Enron's derivatives-related assets increased from $2.2 billion to $12 billion, with most of the growth coming from increased trading through its EnronOnline, an Internet trading system, according to Enron's financial reports. Mr. Dodd figures that if Enron were a bank, it would rank as the 10th largest derivatives dealer. 
Innovations in technology and finance have helped obliterate clear distinctions between banks, brokerage firms and newer hybrids, such as Enron. But financial regulators hew to decades-old divisions of authority, continuing to keep a close watch on banks, brokerage firms and conventional exchanges, while leaving new entrants such as Enron to police themselves. 
In late 2000, Congress passed legislation that exempted from regulation over-the-counter derivatives, which are contracts arranged among sophisticated buyers and sellers such as banks, Wall Street firms and public companies. The measure had support from both parties, as well as the Federal Reserve and the Clinton administration. 
Advocates of derivatives say the instruments give companies, investors and lenders a way to reduce their exposure to many kinds of financial risks. Most regulators and financial-industry executives insist that the country's financial system remains sound. 
But the Enron scandal spotlights an enormous void in the nation's system of financial regulation, and it is rekindling a thorny debate over just how that gap should be filled. 
As a publicly traded company, Enron routinely provided the SEC with general information about its finances but wasn't obliged to divulge to any agency detailed information about its over-the-counter trading activities. 
In the wake of Enron's bankruptcy, federal energy regulators say they plan rules for energy-derivatives accounting. Treasury Secretary Paul O'Neill said derivatives regulations may need modernizing. 
"In this case, I think it's fair to say it may be that our rules and regulations have gotten behind practices," Mr. O'Neill said in a recent interview on the "Charlie Rose Show." 
--- 
Enron assembled a complex structure of partnership deals. In the end, it came tumbling down. See an interactive graphic at WSJ.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section A
ENRON'S MANY STRANDS: SEEKING EVIDENCE
Hard-to-Miss Box of Scraps Catches F.B.I. Agent's Eye
By MICHAEL BRICK

01/28/2002
The New York Times
Page 10, Column 1
c. 2002 New York Times Company

HOUSTON, Jan. 27 -- Agents of both the F.B.I. and the Securities and Exchange Commission have expressed interest in reviewing the remains of documents that a former Enron executive said were recently shredded at the company's headquarters. 
An F.B.I. agent here approached lawyers for shareholders who are suing Enron to discuss the documents, the lawyers said. The shareholders' lawyers had displayed a box of shredded documents last Tuesday. The agent also talked to lawyers representing Enron. The S.E.C. also has pursued the matter by issuing a subpoena to the former executive, Maureen Castaneda, people familiar with that investigation said.
The S.E.C. had already issued subpoenas to more than 30 Enron employees in a variety of departments, according to several people, including an Enron employee who received one in December. The subpoena to Ms. Castaneda was issued last week, when she discussed the documents in interviews with ABC News and The New York Times. 
It is not clear what the documents said or why they were shredded. The federal judge in the shareholder lawsuits, Melinda Harmon, ordered an accelerated schedule of information gathering last week. Shareholders' lawyers had argued for haste, and they said they had reason to believe destruction of documents was continuing. 
An Enron spokesman said the company is cooperating with investigations about the shredded documents. ''It's a good time to let the facts come from the proper authorities investigating this,'' Mark Palmer, a spokesman for Enron, said. ''We are the ones that called the Justice Department.'' 
The documents were generally shredded horizontally rather than vertically, so it is possible to make out words and even sentence fragments. The shreds include accounting records, and some bear the names of the off-the-balance-sheet partnerships that have been linked to transactions allowing Enron to keep some of its problems hidden. 
Shareholders' lawyers have said they might eventually try to reassemble the documents, but it is unclear whether government investigators will make a similar effort. 
Mr. Palmer said he did not know whether Enron usually shredded documents horizontally. The company has said it repeatedly ordered employees not to destroy documents that could be relevant to investigations. It announced on Oct. 31 that the S.E.C. had upgraded its inquiry to a formal investigation. 
Knowingly destroying records that have the potential to be of interest to government investigators would be a crime. Investigators did not signal that the documents discussed by Ms. Castaneda were definitely of interest until after the shredding took place and became public. 
Ms. Castaneda made her comments last Monday. The next day, the S.E.C. notified shareholders' lawyers, who have been working with her, that a subpoena had been issued for Ms. Castaneda's appointment books, all documents concerning entities that have had dealings with Enron and all documents related to Enron other than her pay stubs. 
The F.B.I. agent approached the lawyers for Enron and those for its shareholders in the courthouse last Tuesday to discuss the box of shredded paper that the shareholders' lawyers had put on a table in the courtroom. A lawyer for Arthur Andersen, Enron's accounting firm, suggested in court that the shredded documents should be turned over to the Justice Department. 
The F.B.I. agent did not take the documents, so they remained in the possession of Milberg Weiss, one of the law firms suing Enron. A spokesman for the firm said it would work with Ms. Castaneda's lawyer to comply with the subpoena. 
One possible reason the agent may have left the documents alone is that if they were taken for a criminal investigation, they might be subject to grand jury secrecy rules. Such rules would not apply in a civil investigation. Thus, investigators in a civil inquiry, such as S.E.C representatives, can share the information with F.B.I. and other criminal investigators. But criminal investigators might be prevented by grand jury secrecy from sharing the documents with S.E.C. investigators. 
A lawyer for Ms. Castaneda declined to comment.

Photo: Strands of paper displayed by lawyers for shareholders suing Enron show that despite shredding many words can still be read. (James Estrin/The New York Times) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business/Financial Desk; Section A
ENRON'S MANY STRANDS: LEGAL STRATEGY
SHREDDED PAPERS KEY IN ENRON CASE
By KURT EICHENWALD

01/28/2002
The New York Times
Page 1, Column 1
c. 2002 New York Times Company

For all its eye-popping revelations, the Enron case presents an enormous challenge to government investigators, one that could require years of digging to unravel. At this point, no one knows for sure whether the actions that led to the collapse of the company constituted financial crimes, and, if they did, which should be the focus of the investigation. 
For that reason, legal experts said, the best things that happened for the criminal investigators in the case were the decisions by employees at Enron and its auditor, Arthur Andersen & Company, to begin shredding documents.
Unlike the financial investigations, which will require forensic accountants to unwind complex transactions, the document shredding gives investigators comparatively simple cases of possible obstruction of justice. In such cases, witnesses are confronted, evidence is collected, the law is checked, and the decision whether to seek an indictment is made. 
As a result, these experts said, the focus in the earliest days will be on pursuing possible criminal cases from those events. 
The government's intent will be to use the leverage of potential indictments to push possible defendants into the role of witnesses to get evidence for the broader financial investigation. ''The potential obstruction of justice is critical to the progress of this investigation,'' said Efrem M. Grail, a former prosecutor who is a partner with the Pittsburgh law firm of Reed Smith. ''It is easier for the government to make an obstruction of justice case than it is to make a case that people violated criminal securities law or criminal fraud statutes.'' 
It is critical to start with such limits, legal experts said, to make sure that the case does not go off track, especially in its earliest days. 
''It's essential that the government disciplines itself during the investigation and reins in the scope of the inquiry,'' said Chris Bebel, a former federal prosecutor and former lawyer with the Securities and Exchange Commission. ''Otherwise, it is going to get bogged down in a sea of documents and conflicting statements about complex transactions.'' 
According to people who have spoken with government officials involved in the case, there is strong pressure from senior Justice Department officials to show some quick results from the investigation. That pressure will increase the attention focused on matters like document destruction, where the facts are relatively easy to establish. 
Until now, the most public investigations have been those conducted by a series of Congressional committees. But none of them have the power to bring charges in the case. That responsibility falls instead to prosecutors working on a special Justice Department task force and to a group of agents with the Federal Bureau of Investigation. 
On the regulatory side, one investigation is being handled by the enforcement division at the S.E.C. The Labor Department is also reviewing whether Enron violated any rules while the stock price was plunging when it told employees that they could not sell company shares from their retirement accounts. 
For government investigators, the scandal presents a difficult challenge. In contrast with other well-known white-collar investigations, this inquiry begins with the government's having little guidance on where it should be looking. 
Unlike the insider trading scandals on Wall Street in the 80's -- which began with revelations from Ivan F. Boesky, a stock trader -- the Enron inquiry has no central witness to provide a map of criminal activity. Unlike the Treasury market scandals that enveloped Salomon Brothers in the early 90's, the Enron investigation begins with no admission from the company that it did anything improper. Unlike the price-fixing cases at the Archer Daniels Midland Company, later in the 90's, the Enron case does not have years of incriminating tape recordings provided by a cooperating witness. 
''In this case, unlike in those in the past,'' said Stephen Meagher, a former federal prosecutor who handled white-collar cases in San Francisco, ''there are many dimensions, and you just don't have a clear trail to a central theory of the prosecution.'' 
As a result, the government begins the first major corporate scandal of the new millennium with no strong handle on whether the trouble was brought about by criminal activity or folly. The distinction is critical. Experts say any criminal case stemming from the Enron collapse would be related to some sort of fraud: tax fraud, wire or mail fraud, securities fraud. 
But to get such an indictment, prosecutors would have to prove that the people charged had criminal intent -- that they knew they were engaging in fraud when they were committing the acts in question. 
In other words, if Enron executives or advisers filed or disseminated information about the company that has since proved to be false, the government must be able to demonstrate that they knew about the falsehoods at the time. In this case, establishing such proof could be challenging. 
According to internal Enron documents, every major transaction between the company and the series of partnerships that played a role in the collapse were supposed to have been reviewed by senior company managers and by Arthur Andersen, the company's auditor. 
If information about such deals was presented to Andersen truthfully, and the accountant rendering the opinion was clear of any undisclosed personal or financial conflicts, those rulings by the accountants will be some of the most important weapons in any defense lawyer's argument against indictment. 
Enron officials would effectively be left saying that they had relied on the professionals, and the professionals would maintain that they had offered unbiased judgments -- even if those judgments subsequently proved to be wrong. But here again, legal experts said, the document destruction will probably prove to be critical in giving investigators a means of combating that challenge. 
''Without document destruction, the auditors would have been explaining that they made judgment calls,'' said Franklin B. Velie, a former federal prosecutor now with the law firm of Salans Hertzfeld & Heilbronn in New York, ''and the company would have been saying that they relied on the auditors. 
''It would be hard to know whether this was a horrible mistake or a crime. With document destruction, the path for the investigators seems a lot clearer.''

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section A
ENRON'S MANY STRANDS: THE VICE PRESIDENT
Cheney Is Set to Battle Congress To Keep His Enron Talks Secret
By ELISABETH BUMILLER

01/28/2002
The New York Times
Page 1, Column 1
c. 2002 New York Times Company

WASHINGTON, Jan. 27 -- Vice President Dick Cheney said today that the White House was prepared to go to court to fight the release of documents demanded by Congress as part of the investigation into any influence the Enron Corporation had in formulating the Bush administration's energy policy. 
Mr. Cheney said that the General Accounting Office, the agency demanding the documents, was overstepping its authority and that he had a right to keep the documents secret to preserve his ability to get ''unvarnished'' advice from outside consultants.
David M. Walker, the head of the General Accounting Office, responded this evening in an interview that it was now ''highly likely'' that he would file a lawsuit against the Bush administration if Mr. Cheney did not turn over the documents by the end of this week. Of the vice president's assertion that the agency was overstepping its bounds, Mr. Walker, the comptroller general of the United States, replied, ''Talk is cheap.'' 
It would be the first time that the accounting office, the investigative arm of Congress, sued another government department for not cooperating with an inquiry. 
In interviews on the ABC program ''This Week'' and ''Fox News Sunday,'' Mr. Cheney said that it was the right of the president and vice president to keep secret meetings like those that Mr. Cheney and his energy task force had over the last year with Enron executives as the administration devised its energy policy. 
''What I object to,'' Mr. Cheney said on ''Fox News Sunday,'' ''and what the president's objected to, and what we've told G.A.O. we won't do, is make it impossible for me or future vice presidents to ever have a conversation in confidence with anybody without having, ultimately, to tell a member of Congress what we talked about and what was said.'' 
At issue is how much Enron, a major contributor to the Republican Party, influenced the Bush energy plan, which eases environmental rules, opens public land to drilling and provides tax incentives to energy companies for exploration. Enron and the White House have acknowledged that Enron executives met five times with Mr. Cheney or members of his staff about energy last year, and documents from the meetings could show whether the administration policy mirrored any specific recommendations of Enron's. 
A lawsuit would increase pressure on Mr. Cheney, who is under criticism from Democrats for his relationship with Enron, the giant energy trading company that filed for bankruptcy protection and that has ties to officials in the Bush administration. 
''Now, the fact is, Enron didn't get any special deals,'' Mr. Cheney said on ABC. ''Enron's been treated appropriately by this administration.'' 
Mr. Cheney also said that turning over the documents would be detrimental to the presidency. 
''We've seen it in cases like this before, where it's demanded that presidents cough up and compromise on important principles,'' Mr. Cheney said. As a result, he said, ''we are weaker today as an institution because of the unwise compromises that have been made over the last 30 to 35 years.'' 
Some Republican strategists have begun to worry that Mr. Cheney's stance is contributing to perceptions that the White House has something to hide on the issue. The New York Times/CBS News Poll published today showed that a majority of Republicans believed that the administration had not been forthcoming about its dealings with Enron. 
Mr. Walker, a member of the Reagan and first Bush administrations, who was appointed by President Bill Clinton in 1998 to a 15-year term as comptroller general, said that he did not agree with Mr. Cheney's position that he was allowed to keep the meetings secret because of his position as vice president. 
''This is not about the vice president's constitutional position,'' Mr. Walker said. ''It's about his capacity as chairman of the national energy policy development group. From Day 1, this has not had anything to do with the constitutional position of the vice president. I know they want to present it that way because they think people will be more sympathetic, but that's not factually accurate.'' 
Mr. Walker said that it was his view that the White House had put Mr. Cheney in charge of energy policy for that very reason -- to claim executive privilege and avoid oversight of the group by Congress. ''But that's a loophole big enough to drive a truck through,'' Mr. Walker said. 
Mr. Walker also took issue with an assertion by Mr. Cheney that the accounting office was pursuing the information only because of the political heat generated by the Enron scandal. In the ABC interview, Mr. Cheney said that the accounting office first pursued the documents last summer but then relented under the administration's stance that the information was privileged. 
''The G.A.O. sort of backed off,'' Mr. Cheney said. ''They in effect said, 'Well, maybe we aren't going to pursue it at this point.' What's re-energized it now is the question of Enron, and some efforts by my Democratic friends on the Hill to try to create a political issue out of what's really a corporate issue.'' 
At least 10 Congressional committees are investigating the Enron debacle. 
Mr. Walker responded that Mr. Cheney's statement was ''absolutely false'' and said that the accounting office had been prepared to go to court in September, before the attacks on the World Trade Center and the Pentagon occurred. He decided, he said, to wait until the crisis had abated before pursuing the matter. 
An administration official said today that it was likely that any court fight over the documents would take years, and that the White House was convinced it had a strong case. 
White House officials continue to say that the Enron debacle is a financial scandal, not a political one, and point out that the president's approval ratings remain high, above 80 percent. White House officials also say that even if Mr. Cheney turns over the documents, this will only whet the Democrats' appetite.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Editorial Desk; Section A
Enron and the Lawyers

01/28/2002
The New York Times
Page 14, Column 1
c. 2002 New York Times Company

In the Enron scandal, the accounting industry has been the profession taking the most heat. Before the dust settles, however, it seems inevitable that more questions will be raised about the role that lawyers played in Enron's alleged misdeeds. 
Some of those concerns are already being raised about Vinson & Elkins, Enron's law firm. When the time came for a review of some of the company's questionable partnerships, Enron's internal whistleblower, Sherron Watkins, a vice president, urged the company's chairman, Kenneth Lay, not to assign the task to Vinson & Elkins, since it had approved some of the very partnerships that needed to be investigated. Even so, the assignment was given to that very law firm, which concluded that problems with the partnerships were just cosmetic. It is likely that investigators will want to examine the legal work of Vinson & Elkins, and whether it told Enron about the law firm's possible conflict in the matter.
Other law firms and lawyers will no doubt also be caught up in the investigation. Much of the Enron scandal involves complex financial arrangements that teams of lawyers helped to cobble together, and to which law firms gave their professional imprimatur. If any of these arrangements were in fact illegal, the lawyers may have been in the best position to know. 
The Enron scandal is already producing cries for reform in the accounting industry. Senator Barbara Boxer wants to prohibit accountants from consulting for companies they audit, as Anderson did for Enron. The accounting industry is reportedly in talks with the Securities and Exchange Commission about ways accountants can better regulate themselves. 
It would be gratifying to report that the legal profession had been similarly moved. Despite the recent revelations, the organized bar appears to be regressing on the subject of financial fraud. Last August, an ethics commission presented the American Bar Association with proposals for easing the organization's model rules on lawyer-client confidentiality so that lawyers need not remain silent while their clients engage in illegal activity. The A.B.A. adopted one proposal permitting lawyers to speak out to prevent clients from committing crimes reasonably certain to result in death or serious bodily harm. But it defeated a second proposal that would have let lawyers break confidentiality to prevent their clients from committing fraud reasonably certain to substantially injure the financial interests of another. 
The A.B.A. is meeting again this week in Philadelphia. Despite the intervening Enron scandal, there is apparently little chance it will reconsider its financial fraud vote and some chance it will reverse last August's reform. Even though the association's model rules are largely advisory, this would be precisely the wrong message right now. 
As scrutiny turns from accountants to lawyers in this scandal, the legal profession should be looking for ways to assure Americans that when fraudulent activities are under way that threaten their livelihoods, their investments and their pensions, lawyers will be on their side, not on the side of the criminals.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Financial
HEARSAY The Lawyer's Column
Enron Case Attracts Lawyers Like a Flame Attracts Moths, More Than You Can Shake a Stick at
James V. Grimaldi
Washington Post Staff Writer

01/28/2002
The Washington Post
FINAL
E02
Copyright 2002, The Washington Post Co. All Rights Reserved

Here we go again. Another parade of lawyers. A gaggle of attorneys. A flock of law firms. This is a lawyer full-employment act. A "Who's Who" of litigators. A full-court press. The lawyers are hiring lawyers. Hang on, sports fans. Buckle your seat belts. It's going to be a bumpy column. 
If we're pulling out all the cliche{acute}s, we must be talking a Washington scandal.
If it's the scandal du jour, it must be Enron Corp. 
Thank goodness. This column will write itself. Even the cliche{acute}s will write themselves. Where do we begin? We begin at the eye of storm, with Enron. Of course, we need a massive legal personality to fill the role of chief defender of the alleged corporate plunderer. Robert S. Bennett of Skadden, Arps, Slate, Meagher & Flom fits the bill. We just love our blustery Bob Bennett. We've missed his work defending President Clinton during sex scandals. So it was a delight to see him ride out of the corral with both guns blaring, firing at the media and the Congress as Enron's lawyer. 
But you could just hear a sigh of sadness in the media, though, when reporters realized that David Boies would not represent Andrew Fastow, the chief financial officer who is the supposed mastermind of the partnerships under the microscope. No, it is just a member of Boies's firm, Boies, Schiller & Flexner, who is representing Fastow. 
No slouch himself, Richard Drubel of the firm's New Hampshire office will handle Fastow's civil defense. Who is Drubel and how did he get the call? Turns out that he worked at Susman Godfrey, one of Enron's Houston firms, and Drubel was friends with Fastow there. While known for plaintiff suits, Susman Godfrey also has defended Enron. 
Fastow's case apparently is so complex that he has two other lawyers and law firms -- David Gerger of Foreman, DeGeurin, Nugent & Gerger, who is working the Justice Department angle, and Lawrence Iason of Morvillo, Abramowitz, Grand, Iason & Silberberg, who is handling the Securities and Exchange Commission aspect of the investigation. 
Arthur Andersen has Daniel Kolb and Michael Carroll of Davis Polk & Wardwell. David Duncan, lead partner of Andersen's Enron auditing team until he was fired, has retained Robert J. Giuffra Jr. and Gandolfo V. "Vince" DiBlasi of Sullivan & Cromwell. 
Vinson & Elkins, Enron's primary outside law firm with which Enron has many close ties, has turned to a big-gun litigator for its defense: John Villa of the District's Williams & Connolly, the lawyer and firm that lawyers and law firms turn to when they're in trouble. 
I think we've run out of space. Somehow we'll get to the rest of the Enron lawyers. Let's stretch this out over several columns. There's plenty of time. This isn't going away. We could devote a couple of columns to the plaintiffs' attorneys. More to come. Stay tuned. To be continued. 
Antitrust Follies 
Looking for a little something different? Something not as untoward as the Enron debacle? A little bit lighter fare? Then I suggest you turn to the antitrust division of the U.S. Justice Department, and the Federal Trade Commission. Can we find better vaudeville in town than the antics of antitrust chief Charles James and FTC Chairman Timothy Muris? 
You missed the show? It was Jan. 17 when James and Muris called in the news media at the FTC to announce a deal between the Justice Department and the FTC on how to divvy up antitrust review of industry mergers. Now, this should have been a no-brainer. The old system is so convoluted and confusing that Hearsay does not understand how it works. 
But we'll try to explain it anyway. 
There are a handful of industries in which both the FTC and Justice Department have expertise. So when a hot merger comes up, and the staff of each agency wants a piece of it, the assistant attorney general for antitrust and the FTC chairman have to sort it out. This had been done in an ancient ritual that included a series of athletic events such as arm wrestling, mud wrestling, greased-pig wrestling and a bull-riding competition, and an essay contest. 
Okay, we're making that up. Well, most of it. The agencies really do write essays explaining why they are best to review the mergers. And there really has been a lot of wrangling over who would get to review a merger. The "discussions" would last more than two weeks sometimes, and that's almost half the 30 days in which investigators must decide whether to launch a more detailed review, called a "second request" for documents. Delays of more than 15 days occurred 32 times in 2000. 
The system needed to be fixed. 
So, what did James and Muris do? 
First, they came up with what on its face seems like a sensible plan: The Justice Department would get oversight for media, telecommunications and entertainment industry mergers, while the FTC would get health care, energy and electricity cases. 
So, they have that good idea. But there's a problem. They devise it in secret. They don't tell many people about it, to keep it a big surprise, or in hope that opponents won't be able to stop it. They don't even share the plan with all the other members of the Federal Trade Commission. They keep many of the stakeholders out of the process. And finally -- and this is the funniest part -- they keep members of Congress out of the loop. 
This happened once before at the antitrust division. Last time, it was when the Justice Department abandoned the plan to break up Microsoft Corp. Hello? Is anybody home? Did you forget that this is a democracy, with three branches of government and all? 
At this point, we reveal that Hearsay is biased: We prefer things be done in the open, in public, where there is a vigorous debate and hashing out of all of the ramifications. In the marketplace of ideas, the strong ones prevail. If this truly were a good idea, it would have prevailed. This did not have to be controversial. 
One member of our democracy is Sen. Ernest F. "Fritz" Hollings (D-S.C.). He is chairman of the Senate Commerce Committee. That's a pretty important committee. Lots of bills important to the Bush administration go through that committee. James and Muris didn't tell Sen. Hollings about their big plan. That did not please the senator. And, as the senator might say, he squealed like a pig stuck in a gate. 
His hootin' and hollerin' were enough to halt a signing ceremony scheduled for 1 p.m. Jan. 17 as the media waited in a room nearby. In fact, Muris signed it anyway. James did not. Reporters had press packets, complete with statements hailing the deal. Now it had to be called off. 
Someone pass the popcorn. This is getting good. Who would have thought that the Bush administration antitrust team would be so entertaining? 
The news conference was abruptly canceled without explanation. Later, spokeswoman Gina Talamona offered a statement saying the plan was a good one, but Justice Department staff would meet and confer with Congress. 
So how is the conferring going? Here is a report from a meeting on Thursday, as provided by Hollings's press man, Andy Davis. "DOJ staff admitted that they had not consulted with consumer groups in any way before formulating their proposal," Davis said in an e-mail. "Additionally, they had no statistical data to demonstrate each agency's expertise. Instead, they relied solely on anecdotal evidence." 
Hmmm. Doesn't sound like a very good first meeting. 
In the meantime, perhaps James and Muris could read up on the U.S. Constitution. There's a very sobering line in there about appropriations coming from Congress. 
What were they thinking? Well, this is a pattern that seems to be developing with our antitrust enforcers. Unlike Robert Pitofsky, the previous FTC chairman, who made an effort to develop consensus on policy questions, James and Muris seem to like to keep their best ideas hidden from the public, politicians and the media. Pitofsky spent more than a year in public developing his plan to require spinoffs of companies and divisions before mergers are approved. 
One person involved with the process, however, offers this commentary about Hearsay's thesis: "That's absurd." Rather than a marketplace of ideas, this is a power play, according to the source. This person says that Pitofsky and James's predecessor, Joel Klein, attempted to craft such a deal but failed. The mistake, this person suggests, was to go public with the plan. 
The idea that secrecy is better than openness is very sad. 
In some ways, the handling of this resembles James's failure to get nine states to sign the Microsoft agreement. Most of those attorneys general, with the exception of California's and Massachusetts's, were eager to settle the case. But James failed to build a consensus and moved forward without them. In swinging toward Microsoft's position, James appeared to do little to try to address problems that several key attorneys general had with his deal. As a result, damage has been done to the years of work to build amicable relations between federal and state antitrust enforcers. 
Too simplistic? Maybe. After all, Hearsay doesn't pretend to be as smart as Muris and James. 
Look at this way: From a spectator's standpoint, it has been quite a show. 
Big Billings 
So, you think Sen. Robert G. Torricelli (D-N.J.) got off scot-free? Hardly. The penalty is steep when you're under investigation, even when charges aren't filed. 
Torricelli's latest congressional filing shows that his legal bills totaled more than $1.37 million in 13 months. 
The bills will continue to accumulate as the Senate Ethics Committee considers U.S. Attorney Mary Jo White's three-year investigation into his political fundraising. The case closed this month without charges against the senator, but seven people were convicted of making illegal contributions to his 1996 campaign. 
So far, Torricelli has the bills covered: He's raised about $1.54 million. 
Who wins? The lawyers, of course. In the fourth-quarter filing, the first-place finisher is Ted Wells Jr. of Paul, Weiss, Rifkind, Wharton & Garrison, whose firm billed $195,750. Second place goes to Abbe David Lowell of Manatt, Phelps & Phillips, which billed $20,000. 
Other billers for the final three months of 2001 include Sidley Austin Brown & Wood ($10,000), Zuckerman Spaeder ($10,000), Pierce Atwood ($10,000), and Winston & Strawn ($10,000). Torricelli's ex-wife, Susan Torricelli, also got a piece of the legal defense fund: $5,000. 
Hearsay tries to build consensus every other Monday in Washington Business. Send your cliche{acute}s to hearsay@washpost.com.

http://www.washingtonpost.com 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Accounting for Enron: White House Resists Detailing Cheney, Enron Discussions
By Jeanne Cummings
Staff Reporter of The Wall Street Journal

01/28/2002
The Wall Street Journal
A4
(Copyright (c) 2002, Dow Jones & Company, Inc.)

WASHINGTON -- The Bush administration, struggling to manage the political fallout of the collapse of Enron Corp., is walking a tightrope between aggressive disclosure of government ties to the firm and adamant opposition to releasing the details of Vice President Dick Cheney's private meetings with Enron officials. 
In an appearance on Fox News yesterday, Mr. Cheney said the White House will go to court to block the General Accounting Office, Congress's investigative arm, from learning what was discussed in six meetings he and his staff held this past year with executives of the Houston energy-trading concern, which filed for U.S. bankruptcy-court protection this past month. Three of those meetings occurred while the vice president's office was drafting the administration's national energy policy.
Meanwhile, on Friday, the Office of Management and Budget asked the General Services Administration to re-evaluate all government contracts with Enron and its auditors, Arthur Andersen LLP. An OMB senior aide said the work could include as many as 100 contracts with a total value of about $70 million. 
Both actions come as public polls suggest Enron could become a political issue for President Bush and his party going into the midterm elections this fall. A New York Times poll released yesterday found 58% of respondents said they think the White House is mostly telling the truth but probably is hiding something. Republican veterans in Washington worry that the White House showdown over the meetings between Mr. Cheney and his staff with Enron officials could nurture those suspicions. 
Chief of Staff Andrew Card said on NBC's "Meet the Press" that a compromise is still possible with the GAO. But Mr. Cheney said the White House decided in August that it would fight the disclosures in court rather than yield on the principle that the vice president should be able to receive private advice from outside experts while formulating policy. The Enron saga, he said, shouldn't be allowed to "undermine" the White House's position. 
"The president's bound and determined to defend those principles and to pass on this office, his and mine, to future generations in better shape than when we found it," the vice president said. "For us to compromise on this basic, fundamental principle would, in effect, do that. It would further weaken the presidency, and we don't want to do that." 
Further, Mr. Cheney characterized the GAO as a pawn of Rep. Henry A. Waxman (D., Calif.), who has taken the lead on Capitol Hill in scrutinizing Enron's sway on the administration's energy policy, which was released this past spring. 
On Friday, Mr. Waxman's office released records that suggest a State Department energy plan was amended by the White House to add a provision urging the U.S. government to use its influence with India to maximize development of natural gas in that country, where Enron has a natural-gas-fired power plant. The draft was changed after a meeting between the vice president's office and Enron officials, according to Mr. Waxman's staff. 
OMB Director Mitch Daniels's call for a review of all Enron and Arthur Andersen government contracts was prompted by disclosures of shredded documents, even after an investigation into Enron's financial accounting was launched by the Securities and Exchange Commission. Mr. Daniels said both firms now may be ineligible for government work based on a Federal Acquisition Regulation provision that says a business contracting with the government must have a "satisfactory record of business ethics and integrity." 
Mr. Daniels said the GSA should analyze whether Arthur Andersen and Enron are qualified for future contracts, and "consideration should be given to the initiation of suspensions or disbarment proceedings for all, or a part, of Arthur Andersen and Enron as appropriate." 
Arthur Andersen spokesman Patrick Dorton said, "We have a demonstrated track record of excellent performance for government clients. We will certainly address any questions and would welcome the opportunity to discuss our strong history in government consulting." 
An Enron spokesman said he was unaware of any formal investigation but would respond to any request for information. 
The two firms' government work doesn't appear to constitute a large part of their businesses. Enron, once the largest energy trading business in the world, has a $25 million contract to run the utilities at Fort Hamilton in Brooklyn, N.Y., which army officials said is already under review. 
Senate Judiciary Committee Chairman Patrick J. Leahy (D., Vt.) in the past week questioned the appropriateness of an Arthur Andersen contract with the Federal Bureau of Investigation since the auditing firm is now part of a Justice Department criminal probe of the Enron collapse. The $700,000 management-consulting contract is for work Andersen is doing to help reorganize the FBI and could provide them with access to confidential and sensitive documents, Mr. Leahy said.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Week in Review Desk; Section 4
Ideas & Trends: Power House
Greed, Pain, Excesses. Oh, What a Lovely Issue.
By RICHARD L. BERKE

01/27/2002
The New York Times
Page 1, Column 1
c. 2002 New York Times Company

WASHINGTON -- ONCE they express their requisite sympathy for stockholders and investors in Enron, many Democrats are downright giddy over the company's implosion. Not since Watergate and Richard M. Nixon's cozying up to corporate bigwigs wielding bags of money, they say, has their party had such an ideal vehicle to arouse the citizenry and skewer a Republican president as favoring monied interests. 
''It's Teapot Dome,'' said Jim Hightower, the former Texas agriculture commissioner who has built a career on speaking for the disenfranchised. ''It's a perfect populist crusade.'' Though, unlike the Harding administration scandal, no one in this administration is known to have acted illegally regarding Enron.
Stanley B. Greenberg, who helped devise a populist theme for Al Gore in the 2000 presidential campaign, said the Democrats' rallying cry in the November elections should be: ''The greed is real. The pain is real. The excesses are real.'' 
And the reality is that the issue could be potent for the Democrats, though some are wary of rushing headlong into making Enron a political issue and caution that the company spread its bounty to both parties. Yet Enron was far more generous to Republicans and has closer ties with Republican officials in government. 
Republicans are especially vulnerable because Enron reinforces the long-held perception that their's is the party of big business and the rich. The White House is already a target because the administration is stocked with officials formerly involved with the oil industry in Texas. Even religious conservatives, a powerful constituency for the Republican Party, are grousing that their president is showing more fealty to corporate titans than Christian leaders. 
Adding to the image of a party more attuned to corporate interests than ordinary Americans was the recent election of Marc Racicot as Republican Party chairman. He refused to sever his ties to a law firm that has lobbied extensively for Enron and other companies. The latest New York Times/CBS News Poll, published today, underscores the image of a White House run by the upper crust. It reports that 61 percent of Americans say big business has too much influence in the administration. And 50 percent said the administration's policies favor the rich; only 14 percent said they favor the middle class. 
Democrats may have the best opportunity to capitalize on Enron if they do not retreat to the simplistic anti-big business slogans of decades past. Nearly a century ago, President Theodore Roosevelt scored by demonizing the Standard Oil Company as representing the evils of the newly sprouting corporate giants -- and shattering it into 34 pieces. 
While the age of trustbusting is long gone, Democrats could portray Enron as symbolizing the evils of a new corporate economy fostered by giant stock purchases and multinational companies. They can expand their argument and point to other disastrous business collapses, like Kmart, as evidence that corporations are running roughshod over working people. ''If they're smart, the Democrats' strategy should be to make Bush into another shifty-eyed J. R. Ewing,'' said Kevin Phillips, the political analyst who wrote ''The Politics of Rich and Poor.'' ''If they dig deep enough, they can strike gold: that this guy has been up to his neck in every facet of the oil business in Texas, and it often hasn't reflected well in his judgment.'' 
But turning Enron into a big-business-versus-the-little-people bonanza for the Democrats could be more knotty than it seems -- and not just because Enron spread its largess to Democrats as well. 
For one thing, Democrats can no longer fully disassociate themselves from industry. President Clinton courted big business -- and it was his White House that presided over an era of prosperity for corporate America. 
There is also a history of populist crusades falling flat. Most recently, voters were not altogether convinced in the 2000 campaign when Mr. Gore ridiculed the Bush tax cut proposal as ''a form of class warfare on behalf of billionaires.'' 
In the 1980's, the Democrats' drive to make villains of junk bond trading firms backfired, as did President Harry S. Truman's brazen seizure of big steel companies in 1952. ''Standing up for the little guy will always be part of Democratic Party politics,'' said Senator Evan Bayh of Indiana, chairman of the centrist Democratic Leadership Council. ''But we suffer from the stereotype of resenting people who have been successful even if they have done nothing wrong. We don't want to play into that stereotype.'' 
There is no question that Enron can help Democrats stir up the party faithful, just like Whitewater galvanized hard-core conservatives. The question is whether the Democrats can broaden the appeal of the issue. 
To do so, they cannot merely repeat the party's mantra that Republicans favor the rich, but would have to take the argument to the next step: not only that Republicans are responding to corporate interests, but that they are doing so at the expense of ordinary citizens. Even some religious conservatives have accused the administration of overlooking their interests in favor of big business. Many were furious when, at the Republican Party's winter meeting in Austin, Tex., this month, the party installed Lewis Eisenberg, an abortion rights activist who has contributed to Democrats, to head the party's drive to raise money. Mr. Eisenberg's appeal: he's close to business and knows how to get big donations. 
''It was a terrible appointment,'' said Gary Bauer, a conservative who ran for the Republican presidential nomination in 2000. ''Couldn't they find a chief fund-raiser who actually agreed with the party's platform?'' 
On the other side of the political spectrum, Mr. Hightower said it would not be sufficient for Democrats to assure voters that ''we're on your side.'' He said the party needed to take its argument several steps forward. ''We need to wrap up not just the corruption of money in politics but the actual damage to people and pensions and the disrespect for workers and the flim-flam of the new economy,'' he said. 
Recognizing that such populist appeals could succeed, Mr. Bush, in a striking change of tone, said last week he was outraged by the conduct of Enron, and noted that his own mother-in-law had lost more than $8,000 in Enron shares. 
AS part of their offensive, Republicans are seeking to shift the spotlight to Democrats who took Enron donations, and they portray the Enron debacle as a business scandal with no partisan bounds. In fact, White House officials are questioning why regulators in the Clinton administration did not pick up on the transgressions at Enron. 
Dismissing the Democrats as trying to politicize the Enron collapse, Dan Bartlett, the White House communications director, said, ''The American people are savvy enough to understand the difference between political rhetoric and fact -- and the fact is that the administration did not make any attempts to help Enron.'' 
James Carville, the Democratic consultant, countered that the question is not whether the administration acted to save Enron. ''It's not what they did when they went belly up,'' he said. ''It's what they did when Enron had money.'' 
But, like many other Democrats, Mr. Carville is not free of Enron entanglements. He said he agreed to deliver a speech last October for the corporation for his usual big fee. The company went belly up, so he never could offer his words of wisdom. But chances are, his remarks would not have been about corporate greed.

Photo: Tourists can still gather on the south side of the White House, but vehicles have been rerouted off E Street and concrete barriers have been installed. (Stephen Crowley/The New York Times) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business/Financial Desk; Section C
How a Top Medical Researcher Became Entangled With Enron
By JO THOMAS with REED ABELSON

01/28/2002
The New York Times
Page 1, Column 3
c. 2002 New York Times Company

HOUSTON, Jan. 26 -- Travelers at the airports here notice the children, frail and bald, on their way to the University of Texas M. D. Anderson Cancer Center, but thousands more arrive unseen, by car. There were 20,000 new patients last year, including 500 children. Most were from Texas, but others came from across the nation and the world, hoping for a cure. 
In the five years since Dr. John Mendelsohn, a respected cancer researcher, became president of M. D. Anderson and began courting wealthy donors, politicians and volunteers, the cancer center's research budget has grown 71 percent and the number of patients has increased by 49 percent. Prominent in both Houston and the medical community, he is well spoken, and persuasive, about the needs of M. D. Anderson and the promise of his own research. Last fall, when former President George Bush, a longtime supporter, became chairman of the board of visitors, the center raised $10.3 million in a single gala at Enron Field.
Now, at what should be the pinnacle of his career, Dr. Mendelsohn finds himself in the middle of accusations surrounding two controversial companies: Enron, whose collapse is the subject of intense scrutiny by Congress and regulators, and ImClone Systems, a biotechnology company that is being accused of misleading investors about the possible approval of a drug that Dr. Mendelsohn was instrumental in developing. Dr. Mendelsohn serves on the boards of both companies. 
In an interview this week, Dr. Mendelsohn spoke of his involvement with both companies. Despite criticism about his ability to serve as a director, representing shareholders' interests, Dr. Mendelsohn defended his independence and integrity in his involvement with both companies. 
While Dr. Mendelsohn's role at ImClone has received less scrutiny, his directorship at Enron has been attacked as symbolic of the lack of independence on the board. 
Joining Enron's board in May 1999 and serving on the audit committee, Dr. Mendelsohn had a pivotal role in overseeing the company's relationship with its auditor, Arthur Andersen, and the integrity of the company's financial statements. 
In addition to questions about whether he had the expertise to serve on the committee, there are concerns that, as a fellow member of the Houston elite with Enron's chairman at the time, Kenneth L. Lay, he was reluctant to question management and someone who appeared to be a fellow visionary. Mr. Lay and his company were also generous contributors to M. D. Anderson. 
''It's beyond clubiness,'' said Richard H. Koppes, a former shareholder activist who is now a lawyer at Jones, Day, Reavis & Pogue, noting that people who see one another at social events are frequently unable to criticize each other. ''These people are human,'' he said. 
Dr. Mendelsohn brushed aside criticism that he was not independent because the cancer center had received donations from Enron. Officials at the center said it had received $92,508 from the Enron Foundation and the company since Dr. Mendelsohn joined Enron's board. Mr. Lay, who resigned on Wednesday as Enron's chairman and chief executive, and the Linda and Ken Lay Family Foundation also gave M. D. Anderson $240,250 since Dr. Mendelsohn became president. 
''Some of the articles have made it sound like M. D. Anderson was very dependent on Enron philanthropy to do its work,'' Dr. Mendelsohn said. ''That's far from the case. We've gotten more than that from other companies and private donors.'' 
He added: ''During that same period we've gotten pledges and gifts of more than $233 million. Every gift is important, but our operating budget is $1.4 billion.'' 
As the president of M. D. Anderson, Dr. Mendelsohn is the public face of the institution and serves as its primary fund-raiser. This week, Dr. Mendelsohn said he spent a third of his time raising money to increase the cancer center's quality and size. 
In his role, Dr. Mendelsohn developed close ties to former President George Bush and his wife, Barbara, who lost a child to leukemia. They used their joint 75th birthday party in 1999 to raise $10.1 million for the cancer center. 
The Bushes also attended last November's benefit gala, joining 1,900 guests. A few weeks before that, George Mitchell, a Texas real estate and natural gas magnate, and his wife, Cynthia, gave M. D. Anderson $20 million to help build a $174 million basic science research building. 
And Dr. Mendelsohn has also played a prominent role in Washington, where he has advised President Bush on issues like stem-cell research and the appointment of Dr. Andrew C. von Eschenbach, the director of prostate cancer research at M. D. Anderson, as head of the National Cancer Institute. 
At the time Mr. Lay named Dr. Mendelsohn to the Enron board, he praised him as ''a visionary in the Houston medical community.'' Both men served on the board of the Greater Houston Partnership. Last year, Dr. Mendelsohn appeared with Jeffrey K. Skilling, then chief executive of Enron, at a Houston panel on the future of technology. 
It seemed like a natural alliance, Dr. Mendelsohn said, because M. D. Anderson was ''an important contributor to the well-being of Houston'' and Enron was one of the city's major companies. ''They invited me on the board to take advantage of certain experience I've had, and I was pleased to accept,'' he said. 
He was soon active in many of the board's most controversial decisions -- the approval in June and October 1999 of the partnerships with the company's chief financial officer at the time, Andrew S. Fastow, and the decision to suspend the company's own code of ethics so Mr. Fastow could serve as the general partner of the partnerships. As a member of the audit committee, Dr. Mendelsohn was also responsible for reviewing the transactions between the partnerships and Enron in February 2000 and February 2001. 
''I can't get into details about Enron, because there are a lot of matters under investigation,'' he said. 
But Dr. Mendelsohn has been criticized for not having the appropriate financial background to serve on Enron's board, especially its audit committee. Patrick McGurn, a vice president at Institutional Shareholder Services, which advises large investors on corporate governance, said that, when it comes to business, there were limits on the capabilities of even the smartest doctor. ''At a certain point in time, you are a doctor, and that's your training,'' he said. ''You're probably a businessman secondarily.'' 
As head of M. D. Anderson, Dr. Mendelsohn said he was well qualified to be an Enron director: ''I am the head of a large organization with a large budget and have had to deal with budget and growth issues. I've relied on superb business people to work with me. I haven't arranged complicated derivative deals, but I have been involved in management and growth.'' 
Dr. Mendelsohn has not been the only beneficiary of Enron at M. D. Anderson, but he is the most visible. His predecessor, Dr. Charles A. LeMaistre, 77, who was president of the cancer center for 18 years, is also an Enron director. In 1993, the Enron Foundation pledged $1.5 million to a building campaign, and the Enron Corporation Cancer Screening/Early Detection Clinic was named in honor of Dr. LeMaistre. So far, officials said, the Enron Foundation has paid $900,000 of what it promised. 
At ImClone, where he has been a director since 1998, Dr. Mendelsohn's presence has added to the company's credibility. Within medical circles, he is held in high regard. ''He is an eminent researcher and has a reputation of being an excellent leader and administrator,'' said Diana Petitti, vice chairwoman of the National Cancer Policy Board, where Dr. Mendelsohn is also a member. 
Much of the company's promise has to do with the potential of what could be a revolutionary cancer treatment, C-225, the experimental drug whose development Dr. Mendelsohn pioneered. ImClone's stock price took off when the drug seemed to work in clinical trials. The decision, in September, by Bristol-Myers Squibb to pay as much as $2 billion for a 20 percent stake in ImClone and rights to the drug, named Erbitux, seemed to confirm that optimism. 
In late December, the stock, which had peaked earlier in the month at $75.45, plunged after ImClone announced that the Food and Drug Administration had refused to even consider the company's application for permission to market the drug. Although company executives contended that the agency's only real concern was a lack of certain documentation, The Cancer Letter, a newsletter in Washington, obtained a copy of the F.D.A.'s letter to ImClone and reported that the agency's concerns had been more extensive, even as ImClone continued to assure people it was in sync with the agency. On Jan. 18, Congress announced an investigation. 
The shares, which had recovered somewhat, fell 16 percent on Friday, to $16.49, after the company said it had received inquiries from both the Justice Department and the Securities and Exchange Commission. 
Dr. Mendelsohn was among the shareholders who had cashed out a portion of their stock when Bristol bought its stake. Dr. Mendelsohn said he was told at a board meeting to sell 20 percent of his stock, the percentage Bristol was buying. He exercised options on 90,226 shares and received $6.3 million of the $149.7 million the original stockholders received from Bristol, all of whom had the option to sell some of their stock at $70 a share. His business partners, who had borrowed to invest even more heavily in ImClone, received the lion's share. 
As a scientific adviser to ImClone, Dr. Mendelsohn's role in promoting ImClone and the drug is unclear. Although his involvement added credibility in the early years, according to Jason Kantor, an analyst with J. P. Morgan, the participation of Dr. Leonard B. Saltz in the clinical trials at the Memorial Sloan-Kettering Cancer Center in Manhattan had more weight in persuading people the drug might be effective. 
Dr. Mendelsohn denied he was overly enthusiastic about the drug's promise. ''Personally, I've never done anything but describe the merits of the antibody and its results,'' he said. ''I've given lots of lectures. I stressed, and it's in print, that this is an experiment.'' 
''I get a lot of calls from people asking me, 'Should I invest? Should I invest?' '' he continued. ''I always say it's an experiment. It's well along, but until we prove to the F.D.A. that this is a satisfactory anticancer agent, it's an experiment.'' 
Dr. Mendelsohn said he had been careful to avoid any conflict of interest with ImClone. ''I give a lot of speeches,'' he said, ''and I always state that I am on the board of ImClone and I own stock in the company. I always say this.'' He said he always took note of these connections in his publications about the drug. He takes no money from the corporation for his own research, and he does not prescribe C-225 to his own patients. 
But Dr. Mendelsohn is a paid consultant to ImClone, creating what corporate governance experts view as another threat to his ability to serve as an independent director. Last year, he was paid $12,000 for his work as a scientific adviser, he said, more than the $10,000 he received as a director. He also received 30,000 stock options, which are not vested. 
And Dr. Mendelsohn serves as an adviser to other companies, including Bristol-Myers and assorted biotechnology concerns. 
Although Dr. Mendelsohn does not serve on the boards of any other companies, he is on the board of a new venture capital fund, the Scientia Health Group, which plans to invest in health-related ideas and involves ImClone's management. ''I have only a modest knowledge'' of the fund, he said, noting it had only one meeting.'' 
Dr. Mendelsohn acknowledged that the role of a director is much less appealing these days. His directorships at Enron and ImClone are taking so much of his time, he said, ''I'm probably not going to be on any other board.''

Photo: Dr. John Mendelsohn, president of the University of Texas M. D. Anderson Cancer Center in Houston. Dr. Mendelsohn is on the boards of Enron and ImClone Systems. (F. Carter Smith for The New York Times) Chart: ''Dr. John Mendelsohn'' BORN -- Aug. 31, 1936, Cincinnati. HOMETOWN -- Houston. EDUCATION -- B.S. in bio-chemical sciences, Harvard University, 1958; Fulbright scholar; M.D. from Harvard Medical School, 1963. CAREER HIGHLIGHTS 1970-1985 -- University of California San Diego Medical School faculty; became director of school's cancer center in 1976. 1985-1996 -- Chairman of department of medicine, Memorial Sloan-Kettering Cancer Center. 1996-present -- President of University of Texas M.D. Anderson Cancer Center. FAMILY -- Anne, wife; 3 sons. BOARD MEMBERSHIPS -- Enron; ImClone Systems (pg. C2) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business/Financial Desk; Section C
Patents
While Enron's future is uncertain, its trademarked name could live on for a decade.
By Sabra Chartrand

01/28/2002
The New York Times
Page 9, Column 1
c. 2002 New York Times Company

ENRON'S future as a business enterprise is uncertain, but its name could live on for 10 years -- as a trademark, at least. 
Enron moved a step closer to winning a trademark for its tilted ''E'' logo last week when the United States Office of Patents and Trademarks published the company's application in the office's Official Gazette. Such publication is a routine part of the process, providing notification of pending trademarks and giving the public a chance to oppose them if a case can be made.
Trademarks are valid for 10 years, and can be renewed for 10-year periods thereafter. Five years after a trademark is granted, however, the owner must file an affidavit stating that the trademark is in use. So if Enron dissolved completely, it would be difficult for the company to maintain its trademarks or win renewals. 
In the application published last week the company requested a trademark on the stylized ''E'' in June, specifying that ''the word 'Enron' and the lower element of the letter 'E' are blue, the middle element of the letter 'E' is green, and the top element of the letter 'E' is red.'' 
Despite the company's having filed for bankruptcy in early December, Enron has so many pending trademark applications that the trademark office continued throughout December and January to churn out requests for further information, amendments and publication notices. On Jan. 15, the agency awarded a trademark to Enron for ''E Enron, Enron Field,'' a logo that refers to the Houston sports stadium and is intended to cover ''information relating to sporting events and related activities by means of a global computer network.'' 
Some of Enron's trademarks and pending trademarks appear to be better candidates for selling or transferring to another company than others. Ten days after Enron declared bankruptcy, its application for a trademark on the term ''Espeak'' was approved and another for ''Ethink'' passed a final review. A third, for ''Emeet'' was being opposed. All the trademarks were intended to cover ''an employee communication program via transmission of messages among computer users, namely, an online electronic forum for knowledge sharing, idea generation, creative problem solving and collaboration.'' Theoretically, any number of companies might be interested in taking them off Enron's hands. 
But for the moment, Enron has no plans to abandon its trademarks or pending applications. 
''I know that for now, such rights are being maintained,'' said Scott Brown, a Houston lawyer who handles Enron's trademark applications. ''One thing we're doing on the trademark side is making sure we don't lose any marks during the bankruptcy period,'' Mr. Brown said. ''I think the bankruptcy court would govern any continuing work on behalf of Enron.'' 
That might include processing applications for a number of advertising slogans, like ''One Stop Energy Shop'' and ''Puts the Energy into E-Commerce.'' Enron has also asked for trademarks on catch phrases like ''Investing Our Energy in Your Business'' and ''Click on Your Power'' for its energy management services. Some slogans -- like ''Enron Earth Smart Wind,'' for electrical power distribution -- might seem to make sense only to the people who dreamed them up. 
Other pending trademarks include ''Enron Etelligence,'' ''Enron Envest'' and ''Enron Enpower'' -- all intended to promote Enron's ''financial risk management for energy related facilities.'' 
Investors hoping to recoup money from any of Enron's remaining assets probably should not look to the company's patent portfolio. 
When Enron declared bankruptcy, it held 20 patents that had been assigned to it by various inventors. Much of the value is tied to the shelf life of those patents, and most were issued in the 1980's -- meaning they are due to expire in the next few years. The first to lapse will be patent 4,629,657 for a ''biaxially oriented polypropylene film construction for special lamination,'' which was granted in 1986 and will expire in 2004. 
Seventeen of the patents were issued between 1986 and 1990, and several of those were assigned to the Enron Chemical Company and the Enron LNG Development Corporation. The Enron Corporation was formed in 1985 with the merger of Houston Natural Gas and an Omaha company called InterNorth. The two earlier companies won 26 patents between 1976 and 1985, and Enron may have inherited some or all of those. But since they were granted 17-year terms, the last will expire this year. 
Many companies count patents as intangible assets, which generate income through licensing fees and royalties. The value, of course, derives from the fact that a patent grants exclusive rights to the holder for 17 to 20 years, depending on when it was issued. Most of Enron's patents are unlikely to have much appeal to competitors or clients because they are already too old to offer long-term exclusivity. And it is possible that many of them will expire before all the legal proceedings around Enron come to an end. 
The value of the Enron patents is also limited by the fact that they do not cover universal technologies. The two dozen inventors working on behalf of Enron conducted research in very specific areas. Only certain investors or licensees would probably be interested in a ''ship-based system for compressed natural gas transport'' (patent 5,803,005), a ''direct fuel-fired furnace arrangement for the recovery of gallium and germanium from coal fly ash'' (patent 4,643,110) or a ''method of forming a press-fitted pipe joint'' (patent 4,769,897).

Photo 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section 1
ENRON'S MANY STRANDS: THE WEEK THAT WAS
A Suicide and a Resignation as the Formal Inquiries Get Under Way
By TOM REDBURN

01/27/2002
The New York Times
Page 32, Column 1
c. 2002 New York Times Company

Until Friday, the Enron affair seemed to be a scandal focused on lost money, tainted politics and misleading accounting. But then it turned tragic. 
At the end of a week of high drama in Houston and Washington, J. Clifford Baxter, a former Enron vice chairman, was found dead in his locked car not far from his home in a Houston suburb. It was ruled a suicide.
Friends and associates said that Mr. Baxter, who left the company in May, had clashed last spring with Jeffrey K. Skilling, who was Enron's chief executive at the time. 
Mr. Baxter had ''complained mightily'' about the ''inappropriateness'' of Enron's financial practices, according to Sherron S. Watkins, the whistleblower whose August letter to Kenneth L. Lay, the Enron chairman, outlining the accounting practices that ultimately brought down the company surfaced earlier this month. 
Mr. Baxter was said by friends to be distraught in recent days over his inability to end the abuses that led to the collapse of the company. 
''It makes it real,'' a neighbor of Mr. Baxter said -- ''it'' being the Enron scandal, no longer esoteric. 
THE CHAIRMAN QUITS -- Under pressure from creditors, Mr. Lay ended his long tenure as leader of the company he created and began his new career as a defendant in lawsuits, a witness before Congressional committees and a potential target of criminal investigations. 
The questions about Enron's partnerships and accounting practices confronting Mr. Lay, who is scheduled to testify before Congress on Feb. 4, hark back to the classic Watergate query: What did he know, and when did he know it? In Houston, the further question on the minds of Enron workers, and former workers, is: Why did he continue to encourage employees to buy Enron stock after he knew that doubts had been raised about the company's books? 
Mr. Lay, who used to trade birthday cards with President Bush, won't be visiting his old friend at the White House. The president, traveling in West Virginia, told reporters that he was outraged that Enron executives misled their employees and investors -- including his mother-in-law, who lost $8,096, the White House said. 
Just before Mr. Lay resigned, a former Enron employee, Maureen Castaneda, revealed that people working in the accounting unit had been shredding Enron documents for weeks. 
CONGRESSIONAL INQUIRIES BEGIN -- Two panels of lawmakers held the first of what are expected to be many hearings by the 11 subcommittees looking into Enron's failure and its implications. 
A House subcommittee released evidence suggesting that scores of people were involved in the destruction of documents at the Houston office of Enron's auditor, Arthur Andersen. Andersen officials continued to say the primary blame for the shredding belonged to David B. Duncan, the partner responsible for the Enron account. Lawmakers were skeptical of that account, but Mr. Duncan declined to testify, invoking his Fifth Amendment right against self-incrimination. Lawmakers are expected to ask questions about document destruction at Enron during hearings in early February. 
CAMPAIGN FINANCE REFORM ADVANCES -- The quest to ban the unlimited contributions to the political parties known as soft money was revived last week by Enron's collapse and the tales of how it spread nearly $6 million in campaign donations across Washington since 1989. More than half of the contributions were soft money. 
Advocates of overhauling the nation's campaign finance laws gained enough support to force a House vote on legislation that would make the most wide-ranging change in the law since the Watergate era. The insurgents made their move, a defeat for the House Republican leadership, on the second day of the new Congressional session, collecting the final signatures needed on a petition to send the bill to the floor. 
For all the expressions of outrage on Capitol Hill at last week's hearings, critics argued that Congress shared responsibility for Enron's demise. Of the 248 senators and members of Congress serving on the investigating committees, 212 have received campaign contributions from Enron or Arthur Andersen. In recent weeks, many politicians have scrambled to erase any financial connections to Enron. They have donated the company's contributions to charitable causes or to a fund established to assist former Enron employees. 
CONNECTIONS TO BUSH OFFICIALS -- Former Enron employees said that they had warned senior executives of evidence that a major division of the company had overstated its profits by hundreds of millions of dollars. For three years, the division's No. 2 executive was Thomas E. White, who left Enron last June to become Secretary of the Army. 
Mr. White, who owned more Enron stock than any other senior official joining the Bush administration, disclosed that he held between $25 million and $50 million in Enron stock and a like amount in stock options when he joined the administration. Mr. White, who also said he had had 30 ''personal'' contacts with Enron employees since last June, sold the shares over an extended period of time under a government ethics agreement. 
Associates of Karl Rove, President Bush's top political adviser, revealed that Mr. Rove had recommended the Republican strategist Ralph Reed to Enron for a lucrative consulting contract as Mr. Bush was weighing whether to run for president. The move was intended to keep Mr. Reed loyal to the Bush campaign, they said, without putting him on the Bush payroll. Both Mr. Reed and Mr. Rove said the Enron contract had nothing to do with the Bush campaign. 
WALL STREET'S SKINNY -- Confidential partnership records showed that Enron executives wore two hats, offering Wall Street deal makers, banks, insurance companies, and wealthy investors detailed information about Enron's inner workings and off-the-books holdings that was denied to company shareholders. With the information, Enron enticed the investors to pour cash into one of the partnerships that helped wreck the company by dangling the prospect that they could double their money in less than a year. 
Finance experts called the deal shocking, but probably legal, and said it demonstrated the unintended consequences of securities laws meant to level the market playing field, rather than tilt it toward privileged investors. TOM REDBURN

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Police Probe Ex-Enron Executive's Death --- Baxter, an Apparent Suicide, Worked to Sell Assets Of Energy-Trading Firm
By Wall Street Journal staff reporters Rebecca Smith, Alexei Barrionuevo and Tom Hamburger

01/28/2002
The Wall Street Journal
A3
(Copyright (c) 2002, Dow Jones & Company, Inc.)

The former Enron Corp. executive who was found dead Friday had been engaged in the difficult task of trying to sell off assets as the company's finances started to take a turn for the worse. 
Police investigators in Sugar Land, Texas, said they are continuing their investigation into the death of former Enron Vice Chairman J. Clifford Baxter, who quit the company in May before a string of negative events became public and propelled the Houston energy company into U.S. bankruptcy court last month.
Mr. Baxter was found at 2:23 a.m. Friday morning in his 2002 black Mercedes Benz with a gunshot wound to the head. The car, which police said contained a handgun, was parked in a median about a mile from Mr. Baxter's newly built home that he shared with his wife and two children in the affluent planned community of Sugar Land, about 30 miles southwest of Houston. 
Police quickly put out a press release with the headline "Suicide," only later in the day changing it to read "Death Investigation." Following an autopsy, the Harris County Medical Examiner's office said Mr. Baxter's death was consistent with a suicide. But police spokeswoman Pat Whitty said yesterday that "in spite of the fact the medical examiner believes it's a suicide, we're still processing the car, gun, hair and fibers . . . to ensure it was a suicide." Authorities haven't released the note. 
Those who knew Mr. Baxter, who was 43 years old, expressed shock and disbelief that he should have taken his own life. A former U.S. Air Force captain and investment banker, Mr. Baxter joined Enron in 1991 and quickly became a leading dealmaker for the company, according to one person who worked closely with him. When Enron later became burdened with poorly performing assets, he was charged with helping dispose of assets, particularly ones overseas. 
In that latter role, Mr. Baxter would have been privy to a wealth of information on Enron's hundreds of partnerships and special entities, through which the company pumped up profits and kept debt off its balance sheet. People close to the matter say Mr. Baxter found it difficult to sell many of these assets and was bothered by the fact so many were worth less than their book value. 
Some of the partnerships that apparently came to his attention were ones in which other senior officers may have had an ownership interest. Federal investigators are looking into arrangements that involved Enron's former chief financial officer, Andrew Fastow, and possibly others, including the former corporate treasurer, Ben Glisan. 
Those who knew Mr. Baxter say he regarded himself as the "integrity guy" at Enron. His name appears in a memo written to former Enron Chairman Kenneth Lay in August by whistle-blower Sherron Watkins warning about a potential conflict-of-interest disaster that could be awaiting the company because of the partnerships. Ms. Watkins said Mr. Baxter complained "to all who would listen." 
Like others at Enron, Mr. Baxter was being sought by federal investigators who are trying to unravel Enron's complex financial arrangements. Mr. Baxter had been given legal representation, paid for by Enron, through the law firm of Swidler Berlin Shereff Friedman. 
Mr. Baxter's attorney, Michael Levy, also is representing Enron's chief accounting officer, Rick Causey. Mr. Levy declined to discuss the case but instead criticized reporters and politicians for sullying Enron's name. He said the case "can only truly be understood after months of careful and deliberative investigation. Putting this kind of media spotlight on the topic doesn't help answer those questions any faster." 
On Wednesday, Mr. Levy was contacted by investigators from the House Energy and Commerce Committee who requested an interview with Mr. Baxter. However, no interview date had been set. Earlier this month, Mr. Baxter also received a subpoena for Enron-related documents from a Senate Government Affairs subcommittee. It is unclear which, if any, documents he may have turned over to the panel. 
Just what Mr. Baxter's mental state was prior to his death is uncertain. People who knew him said he continued to work out and spent time on his 72-foot Viking yacht, the Tranquility. He continued to do community work, notably for Junior Achievement. 
Yet one friend said Mr. Baxter obviously was shaken by what happened at Enron, a company he felt he had helped build. "It wasn't unusual for Cliff to be dramatically affected by things," this person said. "That was just his way. He would obsess over details. That's why he was such a good investment banker. 
"He was trying to get some distance from the situation," this person added, "but his personality wouldn't let him." 
Mr. Baxter was seen as particularly close with former Enron Chief Executive Jeffrey Skilling, who plucked the one-time PaineWebber dealmaker out of Enron's Washington, D.C., office where he worked for the natural-gas side of the company. Mr. Skilling, impressed by Mr. Baxter's talent as a negotiator, brought him to Enron's Capital and Trade Resources unit -- the engine of the company's go-go growth during the 1990s. 
Mr. Baxter left Enron to work at Koch Industries, a conglomerate with a heavy interest in energy, in 1995 for less than three months in the company's equities group, which was based in Wichita, Kan. But he returned to Enron and in 1998 was instrumental in the purchase of Portland General Electric, an Oregon utility. This was supposed to have been Enron's springboard into the Western power market, especially California, which had just been deregulated. But the plan never panned out, and Mr. Baxter soon found himself looking for a buyer for Portland General. 
On Friday, four policemen stood guard on the steps of Mr. Baxter's red brick house in Sugar Land, a town named for the cane fields it once contained. They turned away reporters seeking comment from Mrs. Baxter and family friends on hand. 
Neighbors said the Baxters kept pretty much to themselves and often were away. 
Mr. Baxter spent most weekends on his motorboat and one neighbor said the family spent most of last summer cruising the Caribbean, arriving back home just a few days before school started for Mr. Baxter's fifth-grade daughter and high-school-aged son. "When he retired, we figured we would see a lot more of him," said Tom Swonke, a next-door neighbor. "But we didn't." 
After the scandal broke, one Enron official pointed out, Mr. Baxter would sometimes chat with Mr. Skilling and others he had worked with, and they buoyed each other's spirits. But those conversations evidently became less frequent when attorneys advised senior Enron executives facing potential class-action lawsuits and criminal inquiries that they shouldn't be in contact any longer. 
One person who was close with Mr. Baxter at Enron noted he had seemed "in pretty good shape the last time I talked to him," a few days before his death. Still, this person said, Mr. Baxter had lamented of late: "This is all going to have a really bad ending." 
--- 
John R. Emshwiller and Thaddeus Herrick contributed to this article.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section 1
ENRON'S MANY STRANDS: THE SUICIDE
Despite His Qualms, Scandal Engulfed Executive
By JIM YARDLEY and SHAILA K. DEWAN

01/27/2002
The New York Times
Page 33, Column 1
c. 2002 New York Times Company

HOUSTON, Jan. 26 -- Cliff Baxter was supposed to be on a boat right now, floating on some endless expanse of blue water beneath endless blue skies. That was the party line when he left Enron last May as vice chairman, and if former colleagues now say it was never that simple, they nonetheless expected him to be living the good life. 
The son of a police sergeant, Mr. Baxter was getting out of Enron as a rich man at a time when his vision for the company apparently clashed with those of many of its top executives. He had helped create the company's centerpiece business, its energy trading operations, and had risen to vice chairman, a grand title for a man from ordinary beginnings.
He had a loving wife and two children and a big new house in an exclusive suburb. He could afford to do anything, or nothing at all. 
But if Mr. Baxter left Enron months before trouble engulfed the company, those troubles seemed to be engulfing him when he was found dead early Friday morning, shot once in the head. An autopsy was completed on Friday, and the death has been ruled a suicide, a representative of the Harris County Medical Examiner's Office said today. 
Mr. Baxter had been subpoenaed by Congress to testify about Enron, and investigators hoped he would be a helpful witness against his former peers since his name had surfaced as someone who had complained ''mightily'' about the financial partnerships now at the center of the company's collapse. He had also been named as a defendant in a shareholder lawsuit. 
His anguish became evident to those who bumped into him in recent weeks. People who saw him at the Houston Yacht Club, where until recently Mr. Baxter kept a boat, Tranquility Base, noticed that his salt-and-pepper hair had turned mostly white between December and January, said the club's president, Chuck Buckner. 
''Cliff was a guy who clearly seemed to be very concerned that people would think ill of him whether he'd done anything wrong or not,'' said Mr. Buckner, a partner with Ernst & Young. At the club's Christmas party in December, Mr. Buckner said, he and Mr. Baxter spoke only in general terms about Enron. 
''I thought he was a man who'd got out on time, but a man who'd be concerned about what happened to the company,'' Mr. Buckner said. ''He worked really hard. This was the son of a policeman. This wasn't a rich kid.'' 
The mail carrier in the neighborhood, Veronica DeLaCruz, said that Mr. Baxter's mail had been full of certified letters from law firms in Houston and elsewhere in recent months, and that his wife regularly signed for them. But in recent weeks, as the certified letters kept coming, no one came to the door to sign. 
''They were very, very to themselves,'' said a next-door neighbor who spoke on the condition of anonymity. ''They spent most of their time on their yacht.'' 
Police investigators in Sugar Land, the affluent Houston suburb where Mr. Baxter's body was discovered inside his parked Mercedes-Benz, have refused to reveal the contents of a suicide note he left behind, but CNBC has reported that Mr. Baxter wrote that he was distraught over Enron's disintegration and the prospect of having to testify against friends there. 
His reputation among friends and colleagues was of a man of high integrity who could be an intimidating negotiator, sometimes arrogant and brash in a typically Enron mold. He liked expensive cars and motorcycles, and one former colleague, Michael P. Moran, recalled seeing a Ferrari, a Lexus, an S.U.V. and more in his parking spot. 
''He was really pretty typical of what the Enron culture was, although he was a very principled individual,'' said Mr. Moran, a retired general counsel of Enron's natural gas pipeline group who is now serving on the creditors' committee overseeing the bankruptcy. 
Mr. Moran said he was shocked by Mr. Baxter's death because he had had neither financial problems nor a major hand in the company's decline. But, he said, Mr. Baxter had always been concerned about the fate of workers when he was buying or selling companies. 
''The thought has crossed my mind,'' Mr. Moran said, that the suicide came because ''he was so disturbed by all the things that were going on.'' 
Before he left Enron, Mr. Baxter, like many of the company's executives, was active in charity work, particularly for Junior Achievement of Southeast Texas. Jerry V. Mutchler, the group's president, described him as ''very gregarious, a very big thinker and one of those people who thought you should give back.'' 
Mr. Mutchler said Mr. Baxter had raised hundreds of thousands of dollars for the group because he wanted to help make certain young people ''understood the values of the free enterprise system.'' 
Doug Leach, a vice president of Enron Global Markets, said one of Mr. Baxter's fund-raisers for Junior Achievement was called Birdies for Charity. A putting green was set up in the Enron lobby for employees who passed by. ''They would pay to make a putt, and Enron would match the funds,'' Mr. Leach said. ''He held his own as a putter. He had fun, he got into it. 
''That's the part of Cliff I got to know, and that's why this is so sad.'' 
Mr. Baxter grew up in working-class Amityville, N.Y., on the south shore of Long Island, one of six children of a father who was a local police sergeant and a mother who worked for the Town of Babylon. He graduated with honors from New York University, became a captain in the Air Force and earned a master's degree in business at Columbia University. 
Arriving at Columbia Business School as a married father recently discharged from the Air Force, Mr. Baxter did not fit the typical profile of an incoming student. 
Dan Nagao recalled that Mr. Baxter had approached him in an accounting class after noticing in the student directory that Mr. Nagao, too, had served in the military. They became friends, Mr. Nagao said, and he recalled that Mr. Baxter had joined a rock band as a guitarist, hustled fellow students in pool and joined investment and entrepreneurial clubs on campus. 
For years, Mr. Baxter and Mr. Nagao stayed in touch, talking, exchanging e-mail messages, swapping Christmas cards. Mr. Baxter talked about his two children and his wife, Carol, whom he had met while in the Air Force, but rarely about his job. Only last year, after Mr. Nagao asked Mr. Baxter what he did for Enron, did Mr. Baxter state, almost sheepishly, that he was the company's vice chairman. 
This year, though, Mr. Nagao said the usual Christmas card with the long, handwritten note and the photo of his family did not arrive from Mr. Baxter. ''It was something simple, but I remember mentioning to my wife that it was odd,'' said Mr. Nagao, who runs a human resources consulting company in Palo Alto, Calif. 
''I thought, maybe he's busy, maybe he's traveling. I was thinking of calling him, and just asking him, 'Hey, is everything O.K.?' I regret not doing that now.'' 
When Mr. Nagao learned of his friend's death on Friday, he was shocked. ''I don't know what happened, and I would hate to even guess,'' he said. ''We thought that Cliff would survive anything.''

Photo: A visitor arrived at the Sugar Land, Tex., home of the former Enron vice chairman J. Clifford Baxter, who committed suicide early Friday. (F. Carter Smith for The New York Times) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Sports Desk; Section 8
Sports of The Times
The Astros Should Give Some of the Money Back
By GEORGE VECSEY

01/27/2002
The New York Times
Page 6, Column 1
c. 2002 New York Times Company

ANY day now, the geniuses who run baseball are going to accept the court ruling that they cannot whack the Minnesota Twins this year. 
''Never mind our whining about bad teams, shaky finances, unstable future,'' they will instruct their staffs. ''Go out and hustle those season tickets.''
Selling baseball is going to be a trifle hard in Houston, since folks do not have as much money as they thought they did. Thousands of people have lost salaries, stock value and pensions because of the friendly folks from Enron. 
And anybody who can scrape together a few dollars for a ticket to an Astros game must contemplate walking into Enron Field, named for a company synonymous with pumped-up stocks and the shredding of documents. 
Who wants to go to a ballpark with a name that stinks? 
Baseball, ostensibly the American pastime, the last bastion of the cheap seat, the place where people can go and boo, is now stuck with a name that represents the dangerous friendship between rapacious business and complaisant government. 
Give it back. That was my first thought when I realized Enron had paid $100 million for 30 years to flash its name in lights across the new downtown baseball palace. 
Most emphatically, the Astros should not cut a check directly to Kenneth L. Lay, Enron's resigned chairman and chief executive. Instead, the club should put the money into an account for all the people whose life savings went down the drain after the big people sold their stock and got out, leaving the little people once again to hold the bag. 
The account might provide only quarters per family, but it would be a gesture. At the least, the Astros would not be keeping money that had been spent to glorify Kenneth L. Lay and his house of cards. 
It's blood money, really. 
Unfortunately, when I raised the question of giving back the money and the name, the Astros said they could not. 
''We don't have any options,'' said Pam Gardner, the team's president of business operations. ''We honor contracts. When you deal with bankruptcy courts, it's difficult.'' 
According to Gardner, Enron is ''current on payments'' to the club, but she said, ''We're watching the situation carefully.'' 
Apparently, the naming rights to the ballpark can be considered an asset in bankruptcy procedures. Anybody foolish enough to take over the hollow shell of an energy company, even on a penny-for-dollars basis, might be able to stick its own corporate logo on the ball park. 
Repo Stadium, sponsored by your friendly local repossession agents. That has a certain ring to it. 
In the meantime, families and charities, and hospitals and the arts are hurting because they trusted this company that blustered about its smarts and hinted broadly at close ties to power. 
''This is a very sad time in Houston,'' Gardner said. ''This has been devastating to the community.'' 
What stops the management of the Astros from deciding it does not want to be linked to this Enron fiasco? Lawyers, Gardner said. 
There is no clause in the contract allowing the team to lop off the name in case of adverse publicity and failure to say nothing of the blatant possibility of bad faith. 
''We do not have that unilateral ability,'' Gardner said. 
How smart could the Astros' lawyers be? Enron is hardly the first company to go down after making a grandiose commitment to naming rights. There is a long list of airlines, 90-day dot-com wonders, banks and other companies that put their names in lights and then tapped out, leaving behind irrelevant logos on downtown skylines. It's an epidemic. 
These failures ought to be a warning about the risks of increasing synergy among major companies. Take money from an energy company and take the chance of becoming a joke. Buy into a baseball team and suddenly you're a lodge brother to Carl Pohlad and Bud Selig and other owners who perform favors for each other and do not seem to comprehend the meaning of the phrase conflict of interest. 
Come to think of it, having a naming-rights nightmare in Houston just might fit into the grand poor-mouth strategy of Commissioner Selig and his merry band: ''See, we told you so. Baseball really is in a terrible way.'' 
Maybe the Astros' owners are legally stuck with the name while Congress and the courts and maybe even the feds look into the scandal. But I propose a course of passive resistance. 
The Astros should eliminate the copious use of that disgraced name all over its promotions and brochures. Order new cocktail napkins with no Enron Field on them. Tell the public-address announcer to never utter that name again. Play hardball. Do the bare minimum. Don't insult people who were impoverished by flim-flam executives and their docile accountants. 
Come to think of it: if an energy company can fail, so can electricity itself. The Enron signs should develop a serious short circuit. What's Enron going to do, sue? Any lawyers they can afford are surely busy on more important fronts. 
The Astros may not be able to dismantle the sign just yet, but at least the club should cut the power on a shameful name. And when the time comes, the club should donate some money to people who were harmed by Enron.

Photo: The naming rights to the Astros' stadium, for which Enron paid $100 million for 30 years, could be an asset in bankruptcy court. (F. Carter Smith for The New York Times) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Editorial Desk; Section 4
Planet Of the Privileged
By MAUREEN DOWD

01/27/2002
The New York Times
Page 13, Column 5
c. 2002 New York Times Company

Oh, the pull of Planet Enron. 
The atmosphere there was so rarefied that its inhabitants were blissfully oblivious to how privileged they were.
It was a lovely place, sort of like Aspen with oil rigs. The skiing was great because there was always a pristine powder of newly shredded financial records on the slopes. 
There was offshore drilling off every shore and offshore subsidiaries on every corner. 
A red flag fluttered on Planet Enron, but nobody paid attention. 
Journalists in Washington were hunting for Dick Cheney for months, even as he was completely visible and accessible on Planet Enron, where he lumbered down golden boulevards. 
Phil and Wendy Gramm, the king and queen of the Enron prom, cruised around in their white stretch limo, rewarded for years of service, exempting and deregulating. 
Paul O'Neill was also ubiquitous there, his face emblazoned and his words enshrined on the currency, which begins with $1,000 bills. The motto: ''Companies come and go. It's part of the genius of capitalism.'' 
Mr. O'Neill was not Treasury secretary up there, though, merely a private citizen. Kenneth Lay, still smarting that the president decided not to name him Treasury secretary on Earth, anointed himself with the title on Enron. 
The Bushes summered there, and W. and Jeb dropped by when they needed campaign cash. But lately, they began putting brown paper bags over their heads when they visited so no one would notice them hobnobbing with Kenny Boy. 
Everyone was upwardly mobile on Planet Enron, a world more consumed with havens than have-not's. 
There were, blessedly, no lower classes or riffraff. Denizens were blue blood or blue chip but never blue. There were the born rich, and there were the new rich the born rich made rich. The congenitally rich create the crony rich by ushering them onto the boards and payrolls of oil and energy companies and defense contractors. 
There was no conflict of interest on Planet Enron, only confluence of interest. No income tax, only insider tips. No S.E.C. or G.A.O., just C.E.O.'s, S.U.V.'s and N.O.B.D.'s (not our bankruptcy, dear). Q.E.D. 
All meetings on Planet Enron were held in secret, and everyone liked it that way. Auditing was considered rude. It was a very empathetic place. 
On Planet Enron, it seemed only fair that chairman-for-life Kenneth Lay should reward himself with $51 trillion in a severance package, as opposed to the $51 million he was seeking on Planet Earth. 
On Planet Enron, Secretary of the Army Thomas White could whine that he came out with only $12 million from sales of the company's stock. He bravely said he ''would persevere.'' 
On Planet Enron, Karl Rove could expect people to mist up at the poignant tale of how he made mere millions instead of more millions when government ethics rules forced him to sell all of his stocks. And he could ingratiate himself with the conservative leader Ralph Reed by offering him a piece of the Enron rock. 
On Planet Enron, the president, his words muffled by the brown paper bag on his head, could strike a chord complaining that his mother-in-law had lost $8,000 on Enron stock when less connected mortals lost their entire retirements. 
It was a beautifully sheltered place (and not just in the Caymans sense). A place where inhabitants deluded themselves that their accomplishments and windfalls -- Ivy League degrees, energy company sinecures, lucrative consulting contracts, advisory board booty -- were the result of merit and hard work. 
But then turmoil struck. The planet has been overrun by the Wrong Kind: government lawyers bearing subpoenas and grand juries poking around. The thin and tony air has become noxious with the threat of litigation and incarceration. 
Dick Cheney is still there, but he's hiding in a secure location. Now he has caves on two planets. 
President Bush, distancing himself by light-years, has ordered the U.S. government to look into cutting off all business with the planet. 
On Friday, the once-serene orb imploded with the news of the sad death of a leading citizen, who shot himself in his Mercedes after telling friends he did not want to have to turn against his own. 
But Planet Enron is bigger than one company or one tragedy. It's a state of mind, a subculture, a platinum card aristocracy. Its gravitational pull has long proven irresistible.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Week in Review Desk; Section 4
The Nation
I Am Woman, Hear Me Roar in the Enron Scandal
By JILL ABRAMSON

01/27/2002
The New York Times
Page 3, Column 1
c. 2002 New York Times Company

WASHINGTON -- AS the klieg lights went up on the Enron hearings, many of the familiar elements of Washington scandal were on display -- charges of influence peddling, expressions of shock from outraged lawmakers and wall-to-wall lawyers in dark suits. 
But there was one novelty. Enron, unlike so many other Capitol messes, features powerful women in starring roles in a scandal that, at least so far, has nothing to do with sex.
Nancy Temple, the Arthur Andersen lawyer and a leadoff witness, could even emerge as a fall gal. She was raked over the coals by her House inquisitors for sending directives that they believe Andersen employees construed as an invitation to shred thousands of Enron financial documents. Ms. Temple, who sent her memos at a time when she knew the company could be sued for Enron's mounting accounting problems, denied wrongdoing. 
Two women are vying for the part of the heroic whistle-blower. There is Sherron S. Watkins, the Enron executive whose memo warning the chairman, Kenneth L. Lay, that their company might ''implode in a wave of accounting scandals'' helped rocket the ruckus. 
Maureen Castaneda, a former Enron executive, last week went public with allegations of large-scale document shredding at Enron and provided actual proof. She had taken some of the shreds home to use as packing material, only to discover that they were marked with the names Chewco and Jedi, two of Enron's legally questionable partnerships. 
Both women held fancy titles. Ms. Watkins was Enron's vice president for corporate development. Ms. Castaneda was director of foreign exchange and sovereign risk management. 
In recent days, investigators from the Securities and Exchange Commission have been talking with Martha P. Stuart about the role played by her law firm, Kirkland & Ellis, in helping to set up some of the partnerships at the center of the inquiries. 
The highest-profile women to figure in past Washington scandals, the White House intern Monica Lewinsky and the law professor Anita Hill, became famous because they were in the middle of controversies involving charges of sexual misconduct. Both women were in relatively low-level government jobs at the time of their fateful tangles with much more powerful men, President Bill Clinton and Clarence Thomas, then a Supreme Court nominee. 
Other women have been featured players in nonsexual scandals, but they didn't occupy positions near or in the executive suite. Iran-contra's Fawn Hall was a White House secretary. So too, was Watergate's Rose Mary Woods, President Richard Nixon's loyal employee, who was responsible for the famous 18.5-minute gap on a crucial White House tape. (She said her foot accidentally hit the delete pedal as she was busily transcribing.) 
Watergate did feature a professional woman, an ITT lobbyist named Dita Beard, in a bit part, but she missed a bigger role when she went to the hospital in order to avoid testifying before Congress about a memo she wrote. 
Other supporting female scandal players have included the wives of officials under fire, like Martha Mitchell, or subordinate aides, like Deborah Gore Dean, a lieutenant to Housing and Urban Development Secretary Samuel Pierce, who was prosecuted for her role in an influence peddling scandal in the 1980's. 
''The scandal glass ceiling seems to have been broken,'' declared Ellen Miller, a senior fellow at The American Prospect, a liberal magazine, who was an outspoken critic of campaign finance abuses during various fund-raising scandals in the Clinton years. Is this progress? ''The story has changed. It's not about sex. It's about women as major players in powerful positions.'' 
In the Clinton years, a few cracks appeared in that glass ceiling. Three high-powered lawyers found themselves on the hot seat: Hillary Rodham Clinton for her Rose Law Firm connections in Whitewater, and Zoe Baird and Kimba Wood, whose nominations for attorney general fell apart in what became known as Nannygate. 
But Mrs. Clinton fell under scrutiny because of whom she was married to, and the problem that beset Ms. Baird and caused the White House to drop support for Ms. Wood flowed from their domestic lives, not their professional work. 
SUZANNE GARMENT, the author of ''Scandal: The Culture of Mistrust in American Politics'' (Random House, 1991) is not sure the development is a healthy one. 
''It is very interesting that women have reached the point when they can be at the center of scandal because of financial reasons instead of sexual reasons,'' she observed. 
''But insofar as you think women have historically had a superior morality to that of men, then it isn't a cause for celebration.'' 
Whether cause for celebration or worry, the change does reflect the rising status of women in the legal and corporate worlds. They are now high enough on the ladder to drive the action, as Ms. Temple may have done when she instructed Andersen employees on the company's policy concerning the retention (or destruction) of documents. 
They are close enough to the corridors of power to hear secrets and technically proficient enough to figure out what is going on, as Ms. Watkins did as she decoded Enron's impenetrable accounting (she had been an executive at Andersen before joining Enron). 
They may not consider themselves bona fide members of the club of top corporate officials, however. 
For example, while Ms. Temple did testify before a House subcommittee on oversight and investigations, David Duncan, who was the lead Andersen partner on the Enron audit team, refused to answer questions and invoked the Fifth Amendment. 
Ms. Temple may have less to hide -- or she may have felt less bound by the corporate world's brotherhood of silence.

Photo: A former Enron executive, Maureen Castaneda, with shredded Enron documents. (ABC News) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

California; Editorial Pages Desk
Private Enterprise, Public Outrage

01/28/2002
Los Angeles Times
Home Edition
B-10
Copyright 2002 / The Times Mirror Company

I was shocked and disgusted but somehow not surprised by a detail of Kenneth Lay's compensation structure nearly buried at the end of the story of his resignation (Jan. 24). You reported that Lay had a credit line of $7.5 million from Enron, meaning he could borrow that much from the firm at any given time for his personal use. He took advantage of this arrangement multiple times last summer, and then would repay the loan with his Enron stock, only to take advantage of the credit line once again. 
All this was happening in the months just prior to his famous September speech exhorting his employees to buy the "undervalued" stock. Then Enron announced its worst quarter ever. Finally, I understand Lay's motives--they were in his own best interests. Of course.
Lynn Lipinski 
Culver City 
* 
Now that Lay has resigned as chairman of Enron, maybe the Bush administration can hire its old buddy as a consultant on privatizing Social Security. All that talent shouldn't go to waste. 
Margaret Morris 
Ventura

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	




Sarah Palmer
Internal Communications Manager
Enron Public Relations
(713) 853-9843