Enron Executive May Face Perjury Charge, Says Investigator

Leaders of the congressional investigations into the Enron collapse said flatly last night that they did not believe the sworn testimony of the former Enron chief executive, Jeffrey Skilling, and one congressman suggested that Mr Skilling could face formal accusations of perjury.

They challenged his testimony as they prepared to hear from Enron's ex-chairman, Kenneth Lay, who is due to testify tomorrow. Two committees snubbed by Mr Lay a week ago have ordered him to appear.

"We will be respectful but tough in questioning Lay," Byron Dorgan, a Democratic senator, representing North Dakota, told CNN. But while Mr Lay must show up, his spokeswoman said last night that he would reassert his right not to incriminate himself and refuse to answer questions.

"Under the instruction of counsel, Mr Lay will exercise his fifth amendment rights at the Tuesday hearing," Kelly Kimberly said in Houston. She declined further comment.

The scepticism expressed by congress members came after revelations that executives at the failed US energy firm were paid bonuses of up to $5m (£3.5m) shortly before it became the biggest bankruptcy in corporate history. The size of the awards, which emerged yesterday, will further outrage thousands of Enron workers who lost their jobs and in many cases their life savings as a result of the collapse.

After an intense week of hearings, lawmakers say they have strong evidence of illegal activity surrounding the bankruptcy. A House of Representatives' investigative panel heard hours of conflicting testimony on Thursday from Mr Skilling, who was chief executive officer of the Houston-based company, and other top company officials. Mr Skilling said he knew few details of the complex web of partnerships that brought down Enron, and insisted that he had never been warned of problems with the arrangements.

But two Republican congressmen, Jim Greenwood of Pennsylvania and Billy Tauzin of Louisiana, told CBS television that they did not believe him. "He was totally incredible," Mr Tauzin said. "This is the guy who was in charge of the corporation _ I'm afraid he may have put himself in some legal jeopardy as a result [of his testimony]."

Asked whether Mr Skilling could face a perjury indictment by federal prosecutors, Mr Tauzin replied: "You can't come to Congress _ take that oath, as he did, and then not tell the truth."

Even Mr Skilling's mother questioned what he had said: "When you are the CEO and you are on the board of directors, you are supposed to know what's going on with the rest of the company," Betty Skilling told Newsweek magazine. "You can't get off the hook."

Mr Tauzin and Mr Greenwood cited instances in which Mr Skilling said he could not recall details of key conversations that subordinates had testified they had with him about Enron's finances. The company's president and chief operating officer, Jeffrey McMahon, said he had been transferred out of his job as treasurer shortly after he complained to Mr Skilling about the controversial partnerships in March 2000. Mr Skilling's spokeswoman, Judy Leon, did not immediately return a telephone call seeking comment.

The doubts were raised about Mr Skilling's testimony on the same day as CNN revealed that some 500 Enron staff had received windfalls ranging from $1,000 to $5m. The payments were made to retain staff as the firm faced collapse. To get the cash, the staff agreed to stay for 90 days.

The highest payment of $5m went to John Lavorato, who ran Enron's energy trading business, while Louise Kitchen, the division's British-born chief operating officer, pocketed $2m. Both have taken up new jobs with UBS Warburg, the investment bank that now owns the division.

The details emerged as Lord Wakeham, chairman of the press complaints commission, came under fresh pressure to stand down entirely from the post after it was claimed that he had advised Enron on how to make its case in the media in Britain.

Lord Wakeham has stepped aside temporarily to give himself time to fight charges in the US that he was negligent in monitoring the state of Enron.

The fresh allegations in yesterday's Observer follow complaints by an unnamed senior Enron executive that Lord Wakeham had held two meetings with the firm's European branch to discuss the best media strategy for undermining the support for coal in the national press.

The bonuses awarded to the Enron executives are in addition to the millions of dollars made by senior executives from share options. During the past few years, 29 executives together cashed in shares worth more than $1bn.

Workers laid off by Enron have, by contrast, been paid the minimum severance of $4,500 before tax and many are struggling to find work.