Investigations into fraud at Enron are to be extended to include its auditor, Arthur Andersen, after the accountancy firm admitted late on Thursday that it had destroyed documents relating to the finances of the bankrupt energy trader.
The cascade of revelations about Enron's dealings with the Bush administration continued yesterday with the disclosure that an Enron executive asked a top Treasury official last year several times to intervene with bankers to get a credit extension to avoid bankruptcy.
White House spokesman Mr Ari Fleischer said yesterday the collapse of the Houston-based company "needs to be fully investigated to determine if there was any criminal wrongdoing by Enron". He disputed that it was politically damaging to President George W Bush, for whom chief executive Mr Kenneth Lay was a friend and financial patron.
"This dog won't hunt. That's a reference to the politics of it," Mr Fleischer told a White House briefing.The firm that audited Enron's books notified investigators that it had destroyed a "significant" number of documents related to the company, estimated by a Congressional source at "thousands of pages", but gave no reason or details. A spokesman at Arthur Andersen said it didn't know whether its directive to preserve documents demanded by government investigators was violated.
The enforcement director at the Securities and Exchange Commission (SEC), Mr Stephen Cutler, said destruction of documents was "an extremely serious matter" but would not deter the SEC from pursuing its probe.
The news of panic calls from Enron to the Treasury department contradicted assurances from administration officials on Thursday that the company had not sought help from the Bush administration as it slid towards bankruptcy in November.
A Treasury spokesman said yesterday that Enron president Mr Lawrence "Greg" Whalley telephoned the Treasury's undersecretary for domestic finance, Mr Peter Fischer, some half a dozen times in late October and early November.
"As Enron's negotiations with its bankers for an extension of credit neared a decision point, the president of Enron asked Undersecretary Fisher to call the banks," the spokesman said. Mr Fisher "inferred he was being asked to encourage the banks to extend credit. He made no such calls." In a separate call to Commerce Secretary Mr Don Evans, Mr Lay said he would welcome any support in helping the company deal with a bond-rating firm that was considering downgrading Enron, administration officials said.
Enron said Mr Lay's calls to cabinet members were simply to give them a "heads-up" about Enron's problems.
Meanwhile, Time magazine reported that the Democratic Party received a $100,000 (€112,260) donation from Mr Lay shortly after President Bill Clinton instructed chief of staff Mr Mack McLarty to help Enron with a $3 billion power-plant project in India.
Mr McLarty was later hired by Mr Lay, who also played golf with Mr Clinton and slept in the Clinton White House. The Enron chief executive also advised the Clinton administration on energy policy.
US Attorney General Mr John Ashcroft disqualified himself from the criminal inquiry into Enron because of campaign contributions he received.
In Houston, US Attorney Mr Michael Shelby disqualified his entire office because he and other local prosecutors "have family relationships with individuals who are arguably affected by the Enron bankruptcy".
