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US Congress' Enron hearings to start without Lay

Congress begins a week of hearings on Monday into the collapse of energy giant Enron Corp without a star witness, former chairman Kenneth Lay, whose lawyer cited a prosecutorial atmosphere in canceling his appearance.

Lay's testimony had been expected to be the opening highlight of a packed four days of hearings into the rapid crumbling of the one-time Wall Street darling, the largest company to file for bankruptcy in US history.

With a criminal inquiry into Enron's demise under way at the Justice Department and new information emerging about irregular accounting practices, an increasing number of witnesses are refusing to testify before congressional committees.

Ousted Enron chief financial officer Andrew Fastow and former Enron executive Michael Kopper are expected to appear before a House panel on Thursday but to invoke their right not to testify against themselves.

The same constitutional right against self-incrimination was used almost two weeks ago by David Duncan, a senior partner at accounting firm Andersen, Enron's auditor.

Lay, until January 23 Enron's top executive, was due to appear at hearings Monday and Tuesday but his lawyer advised against it after hearing comments by top lawmakers on Sunday television talk shows.

"These inflammatory statements show that judgments have been reached and the tenor of the hearing will be prosecutorial," Lay's attorney, Earl Silbert, wrote in letters to the Senate Commerce Committee and House Financial Services Committee.

DAMAGING REPORT

The decision also followed the weekend release of a report by a special committee of Enron's board of directors that blasted Lay, 59, for his lack of oversight.

Sen Byron Dorgan, chairman of the Senate commerce subcommittee where Lay was due to appear, told NBC's "Today" show he believed Lay canceled his appearance because of the report and not due to lawmakers comments over the weekend.

"I think Ken Lay was looking for a door. I think the release of the Powers report on Saturday evening is a devastating indictment of very serious problems inside that corporation," Dorgan said.

He said the report showed executives got rich while employees and investors lost their life savings.

"We are trying to figure out how do you prevent this from happening again. Where were the regulators? Were they asleep or brain dead?" the senator asked.

The report, prepared by a panel led by University of Texas Law School Dean William Powers, also upbraided the board, Enron's top executives and auditor Andersen for failing to stop rogue financing that enriched certain employees while eventually ruining the company.

Powers and Securities and Exchange Commission Chairman Harvey Pitt will now be Monday's only witnesses at an afternoon session of the House Financial Services subcommittee.

A former Lay protege, one-time Enron CEO Jeff Skilling, is to testify before the House Energy and Commerce subcommittee on Thursday. A spokeswoman for Skilling did not immediately return calls seeking comment on whether his plans had changed.

On NBC's "Meet the Press" on Sunday, Dorgan said Enron had "almost a culture of corporate corruption."

"Clearly some things have happened here that are going to put some real people in some real jeopardy and trouble," said Dorgan, a North Dakota Democrat.

Silbert, in his letters to the Senate and House panels, said Lay, a friend and financial backer of President George W Bush, "firmly rejects any allegations that he engaged in wrongful or criminal conduct."

Doran told Reuters the committee on Monday would discuss whether to subpoena Lay, but he said he had no interest in offering Lay limited immunity in exchange for his testimony.

A spokesman for Tauzin said Lay should have planned on a rough welcome from Congress.

"What was he expecting coming up here, a debutante ball?" asked Tauzin spokesman Ken Johnson. "Thousands of innocent people got stiffed on his watch."

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