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Congressional panels to subpoena Enron's Lay

Two congressional committees said on Monday they would force former Enron Corp chairman Kenneth Lay to appear before their panels after he canceled voluntary appearances citing a prosecutorial atmosphere in Congress.

Announcing plans to subpoena Lay, Senate Commerce Committee Chairman Ernest Hollings lashed out at Enron's ties to the Bush administration and called for a special prosecutor to examine the company's collapse.

"We've got an Enron government," the South Carolina Democrat said at a news conference that quickly dissolved into a litany of charges of influence-peddling involving Enron and President George W Bush's advisors.

On the other side of Capitol Hill, a subcommittee of the House Financial Services Committee on Monday voted unanimously to authorise Lay's subpoena. The committee's chairman, Ohio Republican Rep Michael Oxley, said the authorisation would "be acted on forthwith."

Enron tried to systematically manipulate its results and deceive shareholders as top executives raked in millions of dollars in personal gains, the author of an internal Enron inquiry into the company's collapse told the House panel.

"We found a systematic and pervasive attempt by Enron's management to misrepresent the company's financial condition," said William Powers, dean of the University of Texas Law School.

Power's report was delivered Saturday to bankruptcy court in New York.

HEARINGS WITHOUT LAY

Congress began a week of hearings into Enron on Monday without Lay, who resigned as the company's top executive on January 23.

His testimony to the Senate and House panels had been expected to be the opening highlight of four days of hearings into the collapse of the one-time Wall Street darling, the largest company to file for bankruptcy in US history.

Hollings and other senior members of the Senate Commerce Committee said the panel would meet on Tuesday to authorize the issuance of a subpoena to compel Lay to testify on February 12.

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 Congress.

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

Hollings named several senior Bush administration officials with some past connection to Enron or Andersen, its auditor, and noted that Enron had been a top Bush campaign contributor.

The senator asserted that while Enron was collapsing, the Bush administration "worked all last year" to try to save them. The White House energy plan, the economic stimulus package it supported in Congress, even the administration's approach to tax shelters all were favorable to Enron, Hollings said.

"I've never seen a better example of cash-and-carry government than this Bush administration and Enron."

BOTH PARTIES GOT ENRON MONEY

His charges got a sharp retort from Office of Management and Budget director Mitchell Daniels, who noted that Enron had spread campaign contributions across both political parties.

"I don't think the fact that a big majority of the members of the Budget committee took political contributions from Enron impeaches their judgment at all. I don't believe that for a minute. I think it would be nice if they extended the same courtesy to others," Daniels said. Hollings is also on the Senate Budget Committee.

The Bush administration has acknowledged contacts between Lay and top administration officials last year as Enron found itself in increasing financial difficulty.

On January 22 Bush told reporters that his cabinet's response to a collapsing Enron was: "No help here."

Hollings called for both a special prosecutor to handle the criminal probe into Enron now being conducted by the Justice Department, and a select committee to combine the hodgepodge of congressional investigations into the fallen energy giant.

While Attorney General John Ashcroft had recused himself because of past Enron campaign contributions, he had handed the probe to Deputy Attorney General Larry Thompson, who once worked for a law firm that did work for Enron, Hollings said.

He noted that White House Economic Adviser Lawrence Lindsey and US Trade Representative Robert Zoellick had been consultants to Enron, and Army Secretary Thomas White had been a senior Enron executive.

But Sen Byron Dorgan, a Democrat from North Dakota, said he was not ready to advocate a special prosecutor and Illinois Republican Sen Peter Fitzgerald said he saw no evidence the Justice Department was not taking the probe seriously.

Fitzgerald said he didn't think the Bush administration knew about Enron's problems.

"The fact of the matter is that at root, I think this is a corporate scandal," Fitzgerald said.

"I don't believe that anyone in the Bush administration was aware that there was what appears to me to have been a pyramid scheme going on in Enron Corporation. I suspect that many of the board members of Enron felt that that fact may have been concealed from them as well."

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