Enron bribed tax officials

A crucial report into the collapse of disgraced energy giant Enron has discovered the firm's executives bribed tax officials.
The energy giant - once the US' fifth largest firm - paid no income tax between 1996 and 1999 according to the investigation by the Senate Finance Committee.

The outraged committee's chaiman, Charles Grassley, described a week-long programme - described as a "conference" - of wining and dining, tennis, fishing and golf as part of Enron's strategy to get its own way.

Mr Grassley also said the report called into serious doubt the ethics of tax advisers and the "desperate" bankers, accountants and lawyers who helped Enron.

The investigation provides the first complete story of Enron's efforts to manipulate its taxes and accounting.

The findings of the investigation, which have been kept tightly under wraps until now, have been described by senators as "eye-popping", "disturbing", and "barn-burning".

IRS 'overwhelmed'
Enron's bankruptcy was the first in a wave of scandals that swept across corporate America, transforming attitudes towards companies.

Enron's failure destroyed the retirement savings of thousands of employees and hurt individual investors and pension funds across the world.


Experts say it is likely to lead to the reform of corporate tax law in the US, an area not previously tackled in the aftermath of the Enron scandal.


The collapse of Enron was particularly shocking because its accounts made the firm appear to be healthy and prosperous.

And lawmakers have been scrambling to ensure that laws are changed to prevent the deception recurring.

The Finance Committee's ranking Democrat Max Baucus said Enron "overwhelmed the Internal Revenue Service (IRS) with the complexity" of its transactions.

"The IRS really couldn't figure it out even if it tried," Mr Baucus said, saying that complexity had been Enron's ally.

Guilty parties?

The BBC's New York business correspondent, Stephen Evans, says the big question is who the senators will implicate in the deception.

Kenneth Lay, Enron's former chairman and chief executive, maintained his silence when he appeared before the committee. He has not yet been charged.

Andrew Fastow, the former chief financial officer, has pleaded innocent to 78 counts of fraud, money-laundering, conspiracy and other charges.

But other company employees have alleged that the top executives knew about the damaging schemes being hatched in the finance department.

Evidence from the report today may also give federal prosecutors new leads in their battle to weave together a case against Enron.

It is now 18 months since the accounting black hole was first revealed, but the complexity of the case has slowed legal proceedings.