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Congress to probe Enron links to Wall Street

Analysts who kept recommending shares of Enron Corp as the energy trading giant stumbled toward bankruptcy will face questions from congressional investigators next week as lawmakers chase the company's links on Wall Street, aides said on Wednesday.

The Senate Governmental Affairs Committee said it will hold a hearing on why most stock analysts maintained "buy" recommendations on Enron stock as the company was moving toward a record US bankruptcy filing on December 2.

In the House of Representatives, investigators were already interviewing investment bankers, aides said, seeking to find out who the collapsed company bullied or baited into backing its dubious off-the-books partnerships.

"Based on what we know, some investors were sweet-talked, others were strong-armed into participating in many of Enron's questionable off-the-balance sheet partnerships," said House Energy and Commerce Committee spokesman Ken Johnson.

"Was it illegal? That's what the committee is trying to find out," Johnson said.

Investigators have spoken with or intend to talk to some of the biggest names in finance, including Merrill Lynch & Co, Wachovia Corp, Lehman Bros, Citigroup Inc, Deutsche Bank AG, J P Morgan Chase & Co and the CIBC World Markets unit of Canadian Imperial Bank of Commerce.

The investigators are following up on allegations that Enron linked lucrative securities underwriting business to investment in its partnerships.

An inquiry by a special Enron board has concluded that the partnerships were used for years to help Enron inflate its profits, hide debt and enrich some executives.

The US Justice Department and the US Securities and Exchange Commission are investigating Enron's demise in addition to inquiries by 10 congressional committees.

SENATE LIST

In the Senate, investigators have acquired a list of 53 investors in the "LJM2" partnership, ranging from Citigroup's Citicorp to the Arkansas Teachers Retirement System.

But the chairman of the Senate consumer affairs subcommittee, North Dakota Democrat Byron Dorgan, is trying to find out the names of investors in all of Enron's partnerships which were used to move debt off the company's books.

William Powers, who headed then internal Enron inquiry and provided Dorgan's subcommittee with the LJM2 list of investors, said last week there had been close to 3,000 such partnerships.

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