Grab your popcorn and your legal pads. Congress is set to kick off hours and hours of Enron hearings.

Published January 24, 2002 11:14PM (EST)

When Enron CEO Kenneth Lay spurned an invitation last month from the House Financial Service Committee to testify about the collapse of the company, committee chairman Rep. Michael Oxley, R-Ohio, issued an ominous warning.

"We're disappointed," he said at the time. "But this is the first in a series of hearings and investigations that the committee will be conducting. So, as Arnold Schwarzenegger says, 'We'll be back.'"

Right Oxley was. On Thursday, Congress kicks off Enron-a-rama with two hearings, one held by the House Energy and Commerce Committee, chaired by Rep. W.J. "Billy" Tauzin, R-La., the other by the Senate Governmental Affairs Committee, chaired by Sen. Joseph Lieberman, D-Conn. It's just the beginning of what congressional sources say may become a sort of Iran-Contra scandal of the financial world, with conflicting hearings, massive egos, the blinding glare of television klieg lights, and a long, tedious search for smoking gun after smoking gun.

At least seven congressional committees and subcommittees plan to hold hearings on one aspect or another of Enron's collapse, in addition to investigations by separate federal agencies. Asked on Wednesday if it would make sense to consolidate some of these congressional investigations, Senate Majority Leader Tom Daschle, D-S.D., demurred. "I think initially, because each committee of jurisdiction has a very legitimate right to look into this, it's pretty hard to say to one committee, 'You can't do this.' That's what these committees are designed to do," Daschle said: investigate. "So I'd much rather get all the facts than worry about some convenience for witnesses or others who may be called to testify," he added.

Tauzin and friends will likely be listening to fired Arthur Andersen LLP partner David Duncan invoke his Fifth Amendment right against self-incrimination. Tauzin's committee will also hold hearings on Jan. 29 and 30.

Lieberman and Co. will explore the shell partnerships established by Enron and blessed by auditor/consultant accounting firm Arthur Andersen. "We'll attempt to put the Enron story in a context," says committee spokeswoman Leslie Phillips. "We'll try to identify a number of policy issues that might come into question as a result of Enron's collapse. We'll be looking at it within a context of, for instance, what could the regulatory agencies have done?"

Tauzin's committee has perhaps been the most aggressive in pursuing the matter publicly; it was Tauzin who released the letter from Sherron Watkins, the Enron executive who raised serious concerns about Enron's shell partnerships in a letter to CEO Lay in which she complained about being "incredibly nervous that we will implode in a wave of accounting scandals ... the business world will consider the past successes as nothing but an elaborate accounting hoax."

No one in the House has benefited from Arthur Andersen's largesse more than Tauzin, who has received more than $57,000 in campaign contributions from the firm, which has also been implicated in the scandal. Whether despite or because of this previously cozy relationship, Tauzin has made a big show of slamming Andersen, revealing its celebrated shred-a-thons and demanding more information from managing partner and CEO Joseph F. Berardino.

Tauzin will be joined on stage by his co-star, Rep. John D. Dingell, D-Mich., the ranking Democrat on the Energy and Commerce Committee (and the House's number 10 recipient of Enron cash). In supporting roles are Reps. Jim Greenwood, R-Penn., chair of the committee's subcommittee on oversight and investigations, and Peter Deutsch, D-Florida, that subcommittee's ranking Democrat.

For his part, Lieberman is dealing with last week's revelation that his friend and Senate chief of staff from 1989 to 1992, Michael Lewan, is now an Enron lobbyist who tried unsuccessfully to set up a meeting between Lay and Lieberman. Lewan met three times with Lieberman staffers to discuss Enron-related matters, but never discussed the issue with the unsuccessful vice presidential candidate, a Lieberman spokesman insisted.

Other congressional committees seeking a piece of the story of the U.S.'s largest bankruptcy declaration of all time include:

The Senate Banking, Housing, and Urban Affairs Committee, chaired by Sen. Paul Sarbanes, D-Md., and co-chaired by Sen. Phil Gramm, R-Texas -- the No. 2 Enron recipient in the Senate ($97,350), whose wife, Wendy, was on the Enron board of directors. The committee will hold a hearing on accounting and investor protection issues on Feb. 12 at 10 a.m.

The Senate Commerce Committee's subcommittee on consumer affairs, foreign commerce, and tourism, chaired by Sen. Byron Dorgan, D-N.D., will hold a hearing on Feb. 4 at 9:30 a.m., though it remains unclear just what the committee will be talking about. "We're still in the process of going over the papers and deciding what we're going to focus on in our hearing," says a committee source.

The Senate Energy and Natural Resources Committee, chaired by Sen. Jeff Bingaman, D-N.M., will hold a hearing on the impact of the Enron collapse on energy markets on Jan. 29 at 9:30 a.m. You'll be able to watch the hearing on your computer through a live webcast. Bingaman is the Senate's number eight recipient of Enron contributions, having taken $14,124 from the energy trader. His committee colleague, Sen. Chuck Schumer, D-N.Y., took $21,933 from Enron over the years and is the Senate's number four recipient of Enron dollars.

The Senate Health, Education, Labor and Pensions Committee, chaired by Sen. Ted Kennedy, D-Mass., will look into a broader array of pensions issues, including the move from defined pension plans to 401K plans, which Kennedy believes lack adequate protections for workers. The hearing will be held on Feb. 7.

And, in addition to Lieberman's full committee, the Senate Governmental Affairs Committee's permanent subcommittee on investigations, chaired by Sen. Carl Levin, D-Mich., is planning on holding a hearing later in the year. "We'll be looking into Arthur Andersen and Enron's internal affairs, and maybe touching on banks' involvement, which hasn't been touched on that much," a spokesman says.

Three other congressional committees may or may not hold hearings. The House Financial Services Committee, chaired by Oxley, hasn't announced anything yet. A spokeswoman for the House Education and the Workforce Committee, chaired by Rep. John Boehner, R-Ohio, says, "I don't even know if we're having any."

Likewise, the Senate Finance Committee, chaired by Sen. Max Baucus, D-Mont., made noise about holding a hearing of some sort but seems to have backed off that a bit. "We have nothing scheduled at this time," a spokesman says. Is the committee thinking about holding one? "We have nothing scheduled at this time," he says again.

And as if that weren't enough, the Justice Department has launched a criminal investigation, the Labor Department is examining the retirement benefit plans of Enron employees, and the Securities and Exchange Commission is looking into how well the company reported information about its crumbling empire to investors and capital markets. In California, the state Senate has subpoenaed Enron and Andersen officials about price gouging during the California energy crisis, and the possible destruction of documents by Andersen after they were subpoenaed by the committee.

Attorney General John Ashcroft has recused himself from the Justice Department investigation as a result of the $57,499 Enron has given him over the years. But the potential conflict of interests are almost too many to count. On Wednesday the Hill newspaper reported that in late 2000, 11 members of the Banking Committee were instrumental in sandbagging a move by former Securities and Exchange Commission chief Arthur Levitt that would have barred accounting firms from serving as both auditors and consultants, which Levitt felt would have helped ensure the integrity of audits. Some of these senators even threatened to cut SEC funding if Levitt went ahead with the move. In 2001, Andersen LLP earned $25 million from Enron for auditing and $27 million from Enron for consulting.

Nine of these 11 senators are still on the Banking Committee; two of them -- Gramm and Schumer -- are the number one and number three recipients of Andersen campaign cash, weighing in with $76,850 and $38,584 apiece, according to the Center for Responsive Politics.

"I think there ought to be a firewall between" auditing and consulting, Daschle said on Wednesday. "And if I had to predict, I would say at the end of the day that's one of the changes you're going to see in law. "

Before Thursday's hearings even begin, that morning at 9:15 a.m., Reps. Christopher Shays, R-Conn., and Marty Meehan, D-Mass., will hold a press conference pushing their campaign finance reform bill. Since the 1989-1990 election cycle, Enron has given more than $5.8 million to political candidates.

But almost none of the other recipients of the remaining $5.8 million (not to mention Andersen's cash) have recused themselves from any investigations. Gramm said Wednesday he has decided to remove himself from any "Enron-specific" hearings, but will participate in more general, systemic queries that may affect future government regulation. On the state level, Texas Attorney General John Cornyn, who has received more than $150,000 from Enron and is running to succeed Gramm, recused himself from Enron-related matters. But much more than that seems unlikely; even good government types acknowledge that if every politician who took Enron money recused himself or herself from these hearings, D.C. would be a ghost town.

While Shays and Meehan try to mold the Enron scandal into a weapon for their raison d'jtre, others clearly see other political opportunities available. As Enron is so closely tied with President George W. Bush, many Democrats have railed against the administration's odd behavior in light of the company's collapse. As the ranking Democrat on the House Government Reform Committee, Rep. Henry Waxman, D-Calif., can't call a hearing. But he has become the White House's most vocal pen pal, penning numerous letters demanding information on Enron's role in shaping the administration's energy policy.

Waxman has specifically demanded information about the six meetings Enron executives had with Vice President Dick Cheney while Cheney prepared the administration's energy proposal. Waxman has cited "at least 17 policies" of that proposal that benefit Enron. In response, White House spokesman Ari Fleischer said that "the allegation by Congressman Waxman that anything was put in that plan for political purposes is, of itself, a partisan waste of taxpayer money."

Waxman is the only committee leader looking into the influence Enron had with the Bush administration, though it is a matter of record that Lay helped get his friend Pat Wood to head up the Federal Energy Regulatory Commission, the former chair of which had opposed some key Enron deregulation moves. Lay also lobbied for the retroactive tax corporate breaks Bush supported, which would have given Enron $254 million. Enron is Bush's single largest supporter, having given the former governor $700,000 since his political career began with the 1994 Texas governor's race.

Although Waxman is powerless to bang a gavel, Steve Weiss, a spokesman for the Center for Responsive Politics, fears that the hearings will dissolve into partisan snipes. "It's pretty clear that Democrats will try to label Republicans as the beneficiaries of Enron's political largesse, and that Republicans will attempt to deflect as much of the negative attention as possible," he says. "Virtually every member of Congress involved in the hearings is bound to be heavily critical of Enron and Andersen, but it will be interesting to see if lawmakers who received substantial sums in campaign contributions from the two companies will prove to be convincing in their attacks."

By Jake Tapper

Jake Tapper is the senior White House correspondent for ABC News.

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