Dateline: WASHINGTONBuy the company's stock, Enron Chairman Kenneth Lay urged employees a month after he was warned that the energy-trading giant faced potential accounting scandals.
Lay, who touted Enron's stock and future prospects with an evangelist's fervor, assured employees that the energy company's finances were sound and its books in good shape.
"The third quarter is looking great," Lay messaged an Enron worker on last Sept. 26, three weeks before the company announced a stunning dlrs 638 million in third-quarter losses. Lay's message was part of an electronic meeting with employees on an internal company Internet network.
In one exchange, Lay brushed aside an employee who asked bluntly what would happen when questionable Enron accounting practices "come home to roost" in the next 10 years.
"I would guess 10 years from now our net income will be four-to-six fold what it is today and our market (value) will be eight to 10 times what it is today," Lay replied.
Enron spokesman Vance Meyer declined comment Friday.
Houston-based Enron, once the nation's seventh-largest corporation, slid into the biggest bankruptcy in U.S. history on Dec. 2. Thousands of employees lost their jobs and many saw their retirement accounts _ predominantly in Enron stock _ essentially wiped out.
"My personal belief is that Enron stock is an incredible bargain at current prices and we will look back a couple of years from now and see the great opportunity that we currently have," Lay messaged another employee.
The stock, now worth less than a dollar a share and delisted Tuesday by the New York Stock Exchange, traded at more than dlrs 25 the day of the electronic meeting.
"I have strongly encouraged our ... officers to buy additional Enron stock," Lay messaged. "Some, including myself, have done so over the last couple of months and others will probably do so in the future."
The chairman's assurances about the company's financial health followed a mid-August meeting with whistle-blower Sherron Watkins who warned "we will implode in a wave of accounting scandals" unless Enron halted the kinds of financial practices that eventually led it into bankruptcy.
Within a matter of weeks of Lay's Sept. 26 reassurances to employees, Enron was admitting publicly it had kept hundreds of millions of dollars in debt off the company's books in partnerships _ which were paying millions of dollars in fees to the Enron executives who ran them.
Investigators for the House Energy and Commerce Committee met Friday in Houston with Rick Causey, Enron's chief accounting officer, and in New York with Michael C. Odom, a partner in Arthur Andersen's Houston office who was stripped this week of his management responsibilities because of the destruction of Enron documents.
Ken Johnson, the committee spokesman, said they provided new leads that are being followed.
Enron posted a transcript of the Sept. 26 employee e-mail session. It surfaced in a class-action lawsuit by Enron employees who are suing over the financial losses they suffered in their 401(k) accounts, which were loaded with Enron stock.
Washington attorney Eli Gottesdiener, who is representing employees in the class-action suit, said one of them gave him a copy of the transcript of the meeting.
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