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Lay quits Enron board as Congress probes

Former Enron Corp chairman Kenneth Lay resigned from the company's board on Monday, as two congressional committees vowed to force him to come before their panels to testify on the energy giant's collapse.

But when one of the committees tried to serve a subpoena on Lay, his attorney said he does not know where Lay is and could not accept the subpoena, a spokeswoman for the House of Representatives Financial Services Committee said.

Lay had been scheduled to appear before the panels on Monday, but pulled out the day before on the advice of his attorney.

As the congressional process went ahead without Lay, Senate Commerce Committee Chairman Ernest Hollings, a South Carolina Democrat, called for a special prosecutor to examine the energy trading company's fall, saying he had no confidence in the Justice Department probe.

"We've got an Enron government," Hollings said at a news conference. "They got help from the secretary of the Army, the secretary of treasury, go right on down, the secretary of energy. They got help all last year trying to save them, at every turn," Hollings said.

The Republican National Committee denounced Hollings' comments as "blatant partisanship" and the White House noted Enron had made campaign donations to both political parties. Bush has denied helping Enron as it fell apart last year.

On the other side of Capitol Hill, a subcommittee of the House Financial Services Committee on Monday voted unanimously to authorise Lay's subpoena and pledged to act on it at once.

"We made contact with Mr Lay's attorney this afternoon. He tells us he does not know of Lay's whereabouts, which we find quite puzzling to say the least," said Peggy Peterson, spokeswoman for the House Financial Services Committee.

Earl Silbert, Lay's attorney, was unavailable for comment. A woman answering the phone at his home said he was ill.

The House panel also heard from William Powers, the author of an internal Enron report released at the weekend, that said the company deceived shareholders as executives raked in millions.

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

In Houston, Dynegy Inc, which faces a $10 billion Enron lawsuit over its withdrawal from a proposed merger with its one-time rival, said the internal Enron report showed that the bankrupt firm has only itself to blame for its demise.

"The true causes of Enron's rapid slide into bankruptcy were its own improprieties. Dynegy did not cause Enron's bankruptcy," Dynegy said on Monday in a written response to a lawsuit Enron filed on December 2, claiming that Dynegy's withdrawal of the merger triggered its downfall.

LAY QUITS

Also on Monday, Lay, who resigned as Enron's CEO on January 23, issued a statement in Houston saying he was also stepping down from the board.

"I want to see Enron survive and successfully emerge from reorganisation," Lay said. "Due to the multiple inquiries and investigations, some of which are focused on me personally, I believe that my involvement has become a distraction to achieving this goal."

Lay's testimony to Senate and House panels had been expected to be a highlight of four days of hearings into the crumbling of the one-time Wall Street darling, the largest company to file for bankruptcy in US history. But Lay canceled, with his lawyer citing a "prosecutorial" atmosphere.

Hollings said the Senate Commerce Committee would meet on Tuesday to issue a subpoena to make Lay testify on Februray 12.

However, even if he appears, Lay can invoke his right not to testify against himself, committee members said.

With a criminal inquiry into Enron's demise under way at the Justice Department and the Powers report of wildly 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.

But former Enron Corp CEO Jeffrey Skilling still plans to testify, his spokeswoman said. He is slated to appear with Fastow and Kopper on Thursday.

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