"Enron Is Just the Worst Example"
Billy Tauzin likes the spotlight. Last year, the Louisiana Republican, who chairs the House Energy & Commerce Committee, held high-profile hearings on the failure of network TV to call the 2000 Presidential results correctly on election night. Later, he honed in on the Ford Explorer/Firestone tire fiasco. And remember California's blackouts? He held hearings on that issue, too.
Known as the "Cagey Cajun" on Capitol Hill, Tauzin's latest mission is getting to the bottom of the rapid demise of Enron, the energy trader that became the biggest corporate bankruptcy in the nation's history on Dec. 2. And while his panel is one of several probing Enron, he has been first out of the box with hearings (see "The Swamp Fox on Enron's Tail"). Tauzin has 15 of his staffers on the case, and so far they've collected 80 boxes of documents, interviewed several key officials at Enron and its auditor, Arthur Andersen, and traveled to Houston to dig up information on the company's home base.
On Jan. 18, Tauzin took time to talk with BusinessWeek Correspondent Laura Cohn about what he expects to emerge from his latest investigation and what policy changes might be needed. Here are edited excerpts from their conversation:
Q: What are your expectations here? A:
Q: What are your expectations here?
A:The first thing we have to do is, obviously, get the facts the best we can. We want to get a sense of what Enron was doing, how they were doing it, and what went wrong. Obviously, a lot of people got burned, and so we need to know why. We need to know the good, the bad, and the ugly.
Q: Will people go to jail as a result of the Enron debacle? A:
Q: Will people go to jail as a result of the Enron debacle?
A:They may. [The] Justice [Dept.] would not be launching an investigation if there were not at least some possibility of criminal wrongdoing. We know there has been some document destruction. It may have all been innocent, it may have all been stupid, or it may have all been criminal. We just don't know yet.
Q: Will there be policy changes as a result of this? A:
Q: Will there be policy changes as a result of this?
A:Almost certainly. For a long time, I have defended the practice of accounting firms doing both the audit function and the consulting function [for the same client]. We'd assumed those functions could be conducted without the kind of conflicts of interest that may have been present here. We're learning differently.
We're learning that maybe there are some problems here, maybe those rules need to be changed. We're going to most likely see some changes in the way in which the accounting rules are enforced and, in all probability, in the rules themselves.
Q: In the past, you've been a big backer of the accounting industry, and you disagreed with former Securities & Exchange Commission Chairman Arthur Levitt Jr.'s push to clamp down on conflicts of interest in the industry. A:
Q: In the past, you've been a big backer of the accounting industry, and you disagreed with former Securities & Exchange Commission Chairman Arthur Levitt Jr.'s push to clamp down on conflicts of interest in the industry.
A:Several years ago, when he was making the case, we didn't see evidence of the problem. Today, it's kind of hard to say there isn't evidence of a problem. Arthur Levitt was right. We need to make some changes.
Q: What sort of changes? A:
Q: What sort of changes?
A:There's clearly a need for more disclosure. We're finding out that there are real problems endemic in the structure of Corporate America that we need to deal with. Enron is just the worst example that we're going to have to take into the lab and completely dissect in order to find out what went wrong.
Q: I understand you're quite a hunter. What are you hunting these days? A:
Q: I understand you're quite a hunter. What are you hunting these days?
A:I'm on a deer hunt right now. I'm an avid fisherman, hunter, and outdoorsman. Whenever I get a break, I try to do that.
Q: I understand you're quite a chef as well. A:
Q: I understand you're quite a chef as well.
A:Yeah. I don't hunt anything I can't cook, let me put it that way. My rule is if you take it, you cook it.
Cohn writes for BusinessWeek in Washington
Edited by Beth Belton