THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Back to the Capitol Hill right now. We have not left the Enron hearings. We do anticipate Andrew Fastow, the former CFO, chief financial officer, right now, sitting down. We anticipate him to take the Fifth. We shall watch and wait now.
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JAMES GREENWOOD (R-PA), CHAIRMAN, HOUSE ENERGY SUBCOMMITTEE ON OVERSIGHT: Yet somehow you managed to also run two private equity funds using your insider status at Enron to attract investors and enrich yourself by tens of millions of dollars by doing deals, and highly questionable deals at that, with your own company.
You also, we have learned, used your power, position and influence to threaten and pressure Enron employees in an attempt to obtain favorable terms for your private partnerships.
Question, Mr. Fastow, is, how could you believe that your actions were in any way consistent with your fiduciary duties to Enron and its shareholders or with common sense notions of corporate ethics and propriety? How do you answer, sir?
ANDREW FASTOW, FORMER CHIEF FINANCIAL OFFICER, ENRON: Mr. Chairman, I would like to answer the committee's questions, but on the advice of my counsel, I respectfully decline to answer the question based on the protection afforded me under the Constitution of the United States.
GREENWOOD: Make it clear, Mr. Fastow, are you refusing to answer the question on the basis of the protections afforded to you under the Fifth Amendment of the United States Constitution?
FASTOW: Again, Mr. Chairman, on the advice of my counsel, I respectfully decline to answer the questions based on the protection afforded me under the United States Constitution.
GREENWOOD: And will you invoke your Fifth Amendments rights in response to all of our questions here today?
FASTOW: Yes sir, Mr. Chairman.
GREENWOOD: OK. We regret that, but it is your right. It is therefore the chair's intention to dismiss the witness. But the committee, of course, reserves all of its rights to recall the witness at any time.
Mr. Deutsch, do you agree with our decision?
PETER DEUTSCH (D-FL), RANKING MEMBER: Mr. Chairman, you know, normally I would very easily. But I think that this might be the only time we're going to have any chance in a public setting to even attempt to ask Mr. Fastow questions. And I know that, you know, he is intending to invoke his Fifth Amendment prerogative, which I take very seriously.
But at the same time, you know, within the constraints that he has, and he has that right, you know, I would ask him if there's any area that he feels he can discuss any questions within the area of his, you know -- so I understand him.
I just got rebriefed by our staff on the Rhythms transaction, and still, you know, there will be some people who will testify but, obviously, this is a transaction that you set up -- that you were the general partner of, and the CFO at the time...
GREENWOOD: The chair must note that we would all, of course, like to question Mr. Fastow. But we have had our discussions with his attorney. It was clear to Mr. Fastow and to his attorney that should he invoke his Fifth Amendment, to which he is entitled, he would dismiss him. And we've not had this conversation up until this moment.
And so the decision of the chairman is firm and, Mr. Fastow, you are dismissed and you may be on your way.
FASTOW: Thank you, Mr. Chairman.
GREENWOOD: The chair then would call forward our next witness, Mr. Michael J. Kopper, former managing director of Enron Global Finance.
HEMMER: One by one, we do anticipate a string of Enron executives to come before the House committee. We are told at least four will take the Fifth, but we won't know until it all happens. But clearly, Andrew Fastow has taken the Fifth, and will not answer questions. This, again, Michael Kopper now, in the hot seat, in the House committee.
GREENWOOD: Do you have an opening statement?
MICHAEL KOPPER, FORMER ENRON EXECUTIVE: No, I do not.
GREENWOOD: You're aware, Mr. Kopper, that this committee is holding an investigative hearing and it is a custom and the practice of this committee when holding an investigative hearing to take our testimony under oath.
Do you have any objection to testifying this morning under oath?
KOPPER: No, I do not. GREENWOOD: OK. The chair should then advise you that under the rules of the House and the rules of the committee, you are entitled to be advised by counsel. Do you desire to be advised by counsel during your testimony today?
KOPPER: I do, and I am.
GREENWOOD: And would you identify your counsel, please?
KOPPER: I have Mr. Wallace Timmeny and Mr. David Howard here as my representatives.
GREENWOOD: And could you, Mr. Kopper, please pull your microphone a little closer and make sure that we can hear you?
GREENWOOD: And if your attorneys would spell their last names for the record?
WALLACE TIMMENY, COUNSEL: Mr. Timmeny is T-I-M-M-E-N-Y.
DAVID HOWARD, COUNSEL: And Howard is H-O-W-A-R-D.
GREENWOOD: We thank the gentlemen.
In that case, Mr. Kopper, would you rise and raise your right hand and I'll swear you in?
Mr. Kopper, do you swear that the testimony you are about to give is the truth, the whole truth, and nothing put the truth?
KOPPER: I do.
GREENWOOD: You've already indicated, Mr. Kopper, that you do not come with an opening statement. And so the chair will then recognize himself for questions.
Mr. Kopper, according to the committee's investigation and the Powers report, you violated Enron's code of conduct by investing in partnerships; doing business with Enron without board approval and corrupting others at Enron to join you in your dubious enterprises.
You enriched yourself at Enron's expense to the tune of more than $10 million and you used your power, position and influence within Enron to threaten and pressure Enron employees in an attempt to obtain favorable terms for your private partnerships.
Can you, sitting here under oath, truly deny any of this?
KOPPER: Mr. Chairman, I respectfully decline to answer the question based on my right under the Fifth Amendment to the United States Constitution not to be a witness against myself.
GREENWOOD: Let me be clear, Mr. Kopper: Are you refusing to answer the question on the basis of the protections afforded to you under the Fifth Amendment to the U.S. Constitution?
KOPPER: Yes, I am.
GREENWOOD: Will you invoke your Fifth Amendment rights in response to all questions here today?
KOPPER: Yes, I will.
GREENWOOD: It is, therefore, the chair's intention to dismiss this witness. But the committee, of course, reserves all of its rights to recall the witness at any time.
Mr. Deutsch, would you concur in this?
GREENWOOD: OK. Mr. Kopper, you are dismissed.
KOPPER: Thank you, Mr. Chairman.
HEMMER: As anticipated. Richard Breeden is with us, former chairman of SEC, live in New York, and, as anticipated, the first two are two for two in the sense they took the Fifth Amendment. Pretty much as expected, Mr. Breeden?
RICHARD BREEDEN, FORMER CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: Yes. Yes, Bill. I think so far, that's going as we expected. I think it is significant for, perhaps for visitors to realize, though, what the committee is doing here. It is unusual in Congressional practice to compel the witnesses to actually appear and invoke the Fifth Amendment on camera in person. Often committees, if a Fifth Amendment privilege is going to be invoked, will not go through that -- what might appear to some to be the waste of time of swearing them in and then having the Fifth Amendment invoked when they know in advance that is going to happen.
But I think the committee here is sending a message to all of the witnesses and all of the participants in this event about how serious it is, and that it will bring people forward, and it will require them to stand under the lights and invoke their constitutional rights if they choose to, but that the committee is fiercely determined here to get at the bottom of what happened.
HEMMER: And Richard, I think, and I'm quite sure a lot of viewers watching this, will say what is the point if you are simply coming down and sitting down, but as you indicated the last time we talked 25 minutes ago, the main questions today are, what did you know, what did you do, how did you act, how did you respond, correct?
BREEDEN: Yes, I think in all of this -- we're still in the getting-the-facts stage. Each of the members has noted that eventually Congress will have to decide what changes in law to make to try and prevent this disgusting spectacle from reoccurring. But right now, they want to get to the bottom of who is responsible, who really caused this, and that involves knowing who knew what, and when did they know it? HEMMER: Some other executives. Richard Causey, Richard Buy now sitting down they are raising their right hands. We do anticipate them to take the Fifth as well. We will continue to watch this Enron hearing. Again, the first one today, on Capitol Hill in this House committee room.
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