Senate subpoenas energy provider’s financial records for investigation
SACRAMENTO – Enron Corp. is suing state officials to stop a Senate subpoena of its financial records in a dispute over alleged overcharges for its electricity sales to California.
“They’ve sent two things to Texas — our money and these documents, and they’re saying we can’t get either one back,” said Laurence Drivon, special legal counsel to the Senate Select Committee to Investigate Market Manipulation.
The suit came hours before the committee will consider asking the full Senate to cite the Houston-based company for contempt Wednesday. The other subject of possible sanctions, Atlanta-based Mirant Inc., appears to be cooperating, Drivon said.
Committee chairman Joe Dunn, a Santa Ana Democrat, said the committee’s investigation will continue despite Enron’s “pure act of intimidation. We’re not going to back down.”
Enron’s suit, filed in Sacramento Superior Court, said the company’s financial papers are outside the committee’s jurisdiction because most of its operations and paperwork are outside California.
That shouldn’t matter, Drivon said, citing last year’s successful subpoena of out-of-state documents during the investigation into the activities of former Insurance Commissioner Chuck Quackenbush. Previous investigations have included documents subpoenaed from other nations, he said.
Companies doing business in California cannot claim immunity from its laws or oversight, Drivon and Dunn said. Houston-based Reliant Energy made the same argument but then agreed to turn over 1,800 documents.
Enron’s suit also says Dunn’s committee has not given the company a fair hearing, and the committee has not followed due-process protections before seeking sanctions.
Not so, said Dunn and Drivon, adding that they negotiated with generators to give them time to comply with the subpoenas. Proof of that, they said, comes in the decision to give Williams, AES, Reliant, Dynegy, Duke and NRG an extra week past Tuesday’s deadline to turn over documents subpoenaed last month.
In a letter to Dunn, Steven J. Kean, an Enron executive vice president, said several municipal districts were profiting from the power crisis. “Yet, remarkably, the committee has inexplicably chosen not to include these market participants in its investigations.”
Enron officials are concerned the purpose of the investigation, Kean said, is to “create a convenient political scapegoat to shoulder the blame for California’s policy mistakes and changes in market fundamentals.”
However, Enron has agreed to turn over some “non-confidential” documents at the Wednesday hearing, Kean said.
The committee is on the verge of asking the full Senate to impose sanctions for the first time since 1929, when the Senate briefly jailed a reluctant witness during a committee investigation of price fixing and price gouging allegations involving cement sales to the state.
There are no set penalties, Drivon said — by law, “the Senate can take such action as it deems necessary and appropriate.”
Enron is one of the world’s leading electricity, natural gas and communications companies, with $101 billion in revenues in 2000. It owns 30,000 miles of pipeline, has 20,000 employees and is active in 40 countries. During the first quarter of this year, Enron’s revenues increased 281 percent to $50.1 billion.
It is well connected politically. It has supported both President Bush and his father, President George H.W. Bush.
Last month the firm was a corporate sponsor at a congressional fund-raiser featuring the president, where contributors in tuxedos and gowns dined and drank around a giant gold “W” that reached to the rafters at the Washington Convention Center ballroom.
Enron has also been tied to President Bush’s approach to the energy crisis. Company chairman Kenneth Lay is a friend and one of the largest campaign contributors to Bush and the GOP. Several prominent members of the Bush administration hold stock in the company.
The company is one of several major GOP donors accused of meeting secretly with Vice President Dick Cheney as he drafted the Bush administration’s energy plan.
Enron CEO Jeffrey Skilling was hit in the face by with a pie last month before speaking at the Commonwealth Club of California in San Francisco.