Statements and Speeches

Hearing on Developments Relating to Enron Corporation
February 6, 2002

By Henry A. Waxman

Mr. Chairman, thank you for holding this hearing and for your efforts to get to the bottom of the Enron scandal. Our Committee has a proud history of oversight, and the investigation you and Rep. Dingell are leading is in keeping with that tradition.

A small group of executives have robbed thousands of American families of their financial security, and we are holding these hearings to find out who did it and how they did it. But I don't think we can just look at Enron and Arthur Anderson and stop there. We also have to look at ourselves.

When I've said that before, others have accused me of playing a partisan "blame game" that would divert attention from other issues. I couldn't disagree more. To prevent future Enrons, we have to understand how Ken Lay and other executives operated in the political system. We need to know how they acquired political influence and how they asserted the power they accumulated.

For the past five years, the House Government Reform has been conducting a campaign finance investigation. As the senior Democrat there, I argued from the start that all potential problems -- not just allegations against President Clinton and the Democratic Party -- should be examined. And when I said that, I heard back from some of my Republican colleagues that I was being partisan for wanting everything to be on the table.

I lost that fight. That five-year investigation focused exclusively on allegations against the Democratic Party. Over 1,000 subpoenas were issued. Millions of page of documents were obtained from the Clinton White House and the Democratic campaign committees. And over 100 Clinton Administration officials and Democratic supporters were deposed or forced to testify.

All of that was done in the name of investigating whether campaign contributions influenced the making of public policy. And in the end, a real opportunity was lost. The investigation had little credibility precisely because its scope was driven by party affiliation.

Now we have the Enron scandal and we have a second opportunity to get it right. We must, of course, scrutinize Enron and Arthur Anderson. We have to scrutinize the regulators. And we should scrutinize how Enron and Arthur Anderson exploited the political system.

And even though I believe we must look at both parties, some of my Republican
colleagues are again telling me I'm being a partisan. Now that we have a Republican President and a Republican House, I'm told it's wrong to raise these issues and that doing so will only feed public cynicism.

I don't buy that. We can't sit here sanctimoniously and browbeat Enron and Arthur Anderson executives and question every decision they made if we're not willing to give the same scrutiny to ourselves, to the Clinton Administration, and to the Bush Administration. If we don't examine how the political system broke down, the public will see through us and that, in truth, will only deepen cynicism.

Washington created the regulatory environment that allowed Enron executives to steal from thousands of families and Arthur Anderson auditors to look the other way. And we in Congress need to examine how that happened.

The Enron scandal is a searing indictment of a business culture that values stock price over honesty and integrity and that elevates fictional performance over actual productivity.

The Enron scandal is also an indictment of an accounting profession that has lost its way and values profits and new business opportunities over honoring the public trust.

And the Enron scandal is an indictment of a political system that allowed this calamity to happen. Arthur Levitt's sensible accounting reform proposals didn't die an accidental death. They were a victim of the political system, and it was that same system that allowed derivatives to go unregulated.

Last year Enron was the most politically powerful company in Washington. Even as its foundation was rotting away, it was able to influence energy policy in a number of areas. Its leader, Ken Lay, was able to screen potential FERC Commissioners and lead a successful House effort to retroactively repeal the corporate minimum tax, which would have brought Enron $254 million.

I suspect my good friend from Louisiana is going to tell me that our Committee has a full plate as it is, and that it's not our Committee's jurisdiction to do this. But someone has to do it, and I doubt it will get done if our Committee doesn't accept the challenge.

We owe it to all the victims and all their children to hold Enron accountable. We owe it to them to hold Arthur Anderson accountable. And we owe it to them to hold ourselves accountable.

Thank you, Mr. Chairman.