Star Witness Pulls Out of Enron Hearing

A US Senate committee today cancelled a hearing on Enron after the energy company's former chairman, Kenneth Lay, decided at the last minute not to appear.

Mr Lay would have been the star witness on Capitol Hill in a week full of congressional hearings into the collapse of America's seventh largest company amid allegations of accounting shenanigans.

Mr Lay, a friend and big financial backer of the US president, George Bush, dropped out after several senators and House members suggested that he and other company executives engaged in criminal acts.

Earl Silbert, an attorney for Mr Lay, said his client "cannot be expected to participate in a proceeding in which conclusions have been reached before Mr Lay has been given an opportunity to be heard. These inflammatory statements show that ... the tenor of the hearing will be prosecutorial."

Senators fumed at Mr Lay's last minute decision. Senator Peter Fitzgerald, a Republican from Illinois, said: "Mr Lay is taking a dive ... Mr Lay is the captain of the ship and he needs to explain why his ship has sunk."

With a criminal inquiry into the biggest bankruptcy in US history at the justice department and new information about irregular accounting practices, an increasing number of witnesses are refusing to testify before congressional committees.

Andrew Fastow, Enron's much-criticised former chief financial officer, and Michael Kopper, another former Enron executive, are to appear on Thursday, but are expected to stay silent by invoking their constitutional right not to incriminate themselves.

David Duncan, a senior partner at Andersen, Enron's financial auditor, last week used the same tactic.

Congressional officials today said they would discuss whether to subpoena Mr Lay, but they were not interested in offering him limited immunity against prosecution in exchange for his testimony.

Mr Lay's non-appearance was a blow to many former Enron employees, who had organised "Watch Kenny" gatherings to hear what their former boss has to say about the company's meltdown.

"Why did he lie to us and tell us everything was just great when it was not?" asked Sue Nix, a former Enron employee. "People can accept the truth. The constant lies are what is hard."

Mr Lay's decision came a day after the released of an Enron-authorised review that portrayed Mr Fastow as the central villain while describing Mr Lay as merely "inattentive", although he must take "ultimate responsibility".

The internal report said that Andersen was aware of the secretive partnerships Enron used to manipulate profits and conceal debt. But Andersen, fired by Enron last month, criticised the report an "extremely self-serving" attempt by Enron to shift the blame.