America launches criminal inquiry into collapse of Enron

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The Independent US

The Government of the US announced last night that it was launching a criminal investigation into Enron, the Texas energy company with close ties to President Bush that plunged into bankruptcy last month after financial irregularities and a spectacular collapse of consumer confidence.

The Justice Department said it had formed a national task force, including federal prosecutors from Houston, San Francisco, New York and other big cities, to look into possible legal violations by company officials who cashed out more than $1bn (£0.7bn) in stock options while the bulk of their employees saw their retirement accounts, heavily dependent on Enron stock, dwindle to near nothing.

The investigation follows on from two other civil probes, one by the Department of Labour into the company pension plan and one by the New York Securities and Exchange Commission into the company's admission that it overstated its profits over the past four years.

The bankruptcy of Enron, once the darling of the stock exchange, has been the most spectacular in US corporate history. As the company's troubles mount, the political heat on the White House will almost inevitably rise too, since Enron was a major contributor to the Bush presidential campaign and Enron's chairman, Kenneth Lay, had a significant influence on energy policy.

In a letter to Henry Waxman, a Democratic congressman, the Bush administration admitted on Tuesday that it had held six meetings with company executives to help develop its energy policy ­ the last of them, in October, a week before the first of the disclosures that led to Enron's bankruptcy.

Previously, The White House had acknowledged one meeting between Vice-President Dick Cheney, the head of Mr Bush's energy task force, and Mr Lay, a friend of Mr Bush whom the President calls "Kenny Boy". Hearings into the Enron collapse, to be held by the Senate's Government Affairs Committee, open next month. Joseph Lieberman, the committee's chairman and Al Gore's running mate on the Democratic ticket in 2000, has made clear he will investigate whether Enron unduly influenced the Bush energy strategy.