California readies criminal charges against Enron

The energy company's response to subpoenas has been "disgusting," charges state Senate committee head.

By Anthony York
Published February 1, 2002 6:44PM (EST)

The chairman of a California state Senate committee says he is prepared to seek criminal charges against Enron and Arthur Andersen for destroying documents that he believes were under subpoena from his committee.

"We're in a unique position in California that no one else is in," said Orange County Democrat Joe Dunn, chairman of the state Senate's Committee to Investigate Price Manipulation of the Wholesale Energy Market. "The destruction of those documents occurred last fall. The subpoena was served on June 11. From the media accounts of what was destroyed, we believe that those destroyed documents fall clearly within the categories of documents that were demanded under the document subpoena last June. Under California law, the destruction of documents that are under a legal subpoena constitutes both potentially civil and criminal violations."

If that is the case, Dunn said, the committee could file criminal and/or civil charges against Enron and Andersen after a pair of depositions set for the next two weeks. "If it appears, as we believe, that [the documents] were under our subpoena from last June, then we will go forward with any civil and criminal charges that are available to us and whatever sanctions may results from those," he said, adding that where those charges would be filed remained up in the air.

Enron did not return numerous calls seeking comment.

Dunn said the committee is currently exploring whether the charges would be filed by the local district attorney or the state's attorney general, and whether they would be state or federal charges. "Just who has jurisdiction over the charges, I just don't know the answer to that yet."

Dunn's committee has served both Enron and Andersen with new subpoenas, seeking to clarify exactly which documents were destroyed and when. The committee has issued what is known as a "Person Most Knowledgeable" subpoena to both Enron and Andersen. Dunn says Enron has not yet said whether it will send an official to the deposition, set for Wednesday.

Dunn says he has struggled to get Enron's cooperation in the past, and did not rule out finding Enron in contempt if Enron executives fail to cooperate now. "If they send somebody who says, 'I don't know, I don't know,' then that's contempt," he said. "They have the burden of sending someone who will be able to answer our questions. To be honest, it would not surprise us if they try to sue the committee just to stop the deposition."

The June subpoenas were issued before Enron's major financial troubles began. From the beginning, Dunn says, his committee has been concerned only with investigating Enron's role in possible price manipulation in California's energy markets.

California Democrats and Republicans have both speculated that California energy producers and traders -- including Enron -- created an artificial shortage to drive up wholesale energy prices in California last year. Thursday, Sens. Dianne Feinstein and Barbara Boxer asked a Senate committee and the Federal Energy Regulatory Commission to open inquiries into similar charges.

If Enron officials are looking to be bailed out by the two Republicans on Dunn's committee, they're in for a rude awakening. "Am I prepared to throw someone in jail for noncompliance? Hell, yes," Sen. Bill Morrow, the ranking Republican on the committee, said in June.

Sparring with Enron is nothing new for Dunn. He says of all the energy companies that have been asked for information by his committee, Enron has been the least cooperative. (That sentiment was echoed in Washington Thursday by Sen. Byron Dorgan, D-N.D., chairman of a Senate Commerce subcommittee, who says Enron officials "just simply have not cooperated" in providing the documents sought by his committee.)

Dunn characterized the company's response to his committee as "disgusting." The company only agreed to hand over documents to Dunn after it was threatened with fines of $1 million per day. When it did hand over the documents, Dunn says, they were "woefully inadequate."

Dunn says Enron has been served the subpoena, and he is hoping that an Enron official will appear for the depositions Wednesday.

Anthony York

Anthony York is Salon's Washington correspondent.

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