Wakeham faces British inquiry into Enron role
Antony Barnett and Ed Vulliamy in New York Sunday January 27, 2002 The Observer
Lord Wakeham, the former Tory Energy Secretary who now chairs of the Press Complaints Commission, faces the humiliating prospect of a British inquiry into his role in the Enron scandal.
This could result in him being heavily fined and stripped of his professional qualifications. He could also lose lucrative directorships with four other companies.
Wakeham, who was an Enron director, has already been summoned to appear before a Senate committee to explain his role in the £55 billion collapse, the largest in US corporate history, which has threatened to engulf the Bush administration. Wakeham was a key member of Enron's board audit committee, which was supposed to prevent any financial wrongdoing and protect shareholders' interests.
Last night America's main trade union organisation, the AFL-CIO, which represents thousands of Enron workers who lost their jobs and saw the value of their pensions crumble, said it intended to launch a formal complaint about Wakeham to the Institute of Chartered Accountants in England and Wales.
Wakeham, who qualified as a chartered accountant before becoming a minister in Margaret Thatcher's governments, would then face an investigation by the institution's professional conduct committee into whether he had acted competently as a non-executive director of Enron. If Wakeham was found to have 'performed his work inefficiently or incompetently' he could face a range of penalties from being struck off to a fine.
A spokesman for the institute said he could not comment on any individual cases, but confirmed that, if a complaint about Wakeham was received, the institute would have a duty to begin a formal investigation.
The AFL-CIO, which represents 13 million workers in the US, has also written to the chairmen of four companies where Wakeham is a director asking them to sack him from their boards.
Wakeham is a director of Bristol & West building society (now owned by the Bank of Ireland), Michael Page International recruitment consultants, shipbuilder Vosper Thorneycroft and investment bank Rothschilds.
The letters, which were sent out on Friday addressed to the chairman of each company, state: 'As you are most likely aware, Lord Wakeham is a director of Enron Corporation. We are writing to ask that in light of Lord Wakeham's role at Enron, the board of directors not nominate him to another term as director, unless Lord Wakeham can show he personally took meaningful steps to protect Enron investors.'
Damon Silvers, the legal adviser at the AFL-CIO, said: 'Lord Wakeham has a lot of questions to answer. We believe he was one of a number of key directors who bear particular responsibility for the Enron collapse. He was a qualified accountant who was on the audit committee and if he was doing his job competently then this scandal might never have happened.'
Wakeham has so far refused to comment publicly about his Enron role and did not respond to any phone calls yesterday.
Wakeham was known as Thatcher's 'Mr Fix-It' . As Energy Secretary in 1990 he helped privatise the UK electricity industry and gave consent for Enron to build Britain's largest private power plant on Teesside.
Since 1994 Wakeham has been a non-executive board director of Enron, earning more than £80,000 a year from the company. As well as his director's salary he was paid an additional fee for consultancy work and owned thousands of shares in the corporation.
Most crucially, Wakeham was a member of Enron's audit and compliance committee, which was supposed to scrutinise the complex transactions between the giant energy trading company and two partnerships set up by its chief financial officer, Andrew Fastow.
It is these two partnerships that are the central focus of the criminal investigation into Enron's spectacular collapse as it is alleged they allowed the corporation to hide millions of pounds in losses and keep investors in the dark about the state of the company's profits.