US Joint Committee On Taxation Publishes Enron Report

by Mike Godfrey, Tax-News.com, Washington

14 February 2003

A report presented to the Senate Finance Committee by the House-Senate Joint Committee on Taxation contains 'eye-popping' details of Enron's complex tax transactions, according to reports.

The Joint Committee studied the collapsed energy trader's tax affairs for just under a year, with the intention of discovering whether the company had flouted US tax laws. Their investigation ran parallel with that conducted by examiner, Neal Batson, who was appointed by the federal bankruptcy court for the same purpose.

Speaking on Wednesday prior to the release of the report, Committee chairman, Charles Grassley described the study as 'an absolute barn-burner'.

'In addition to an eye-popping account of executive compensation, the report provides for the first time the complete story of Enron's efforts to manipulate its taxes and accounting. The report is very disturbing in its findings,' he explained.

According to reports in the national media yesterday, the investigation's findings centred upon the manipulation of the two sets of accounts which must be kept by firms, for the benefit of shareholders and the IRS. The Associated Press revealed that:

'In one 1997 transaction reportedly examined by Batson's staff, Enron transferred a lease on corporate jets and other assets into a special purpose entity. A complex series of loans and swaps of cash and stock produced big tax losses and deductions extending over several years. The deal was said to have netted Enron $66 million to add to its earnings between 1997 and 2001.'

Speaking to the New York Times with regard to the findings of the report on Thursday, Enron spokesman, Mark Palmer stressed that the firm has cooperated and will continue to cooperate with investigations into its spectacular descent into bankruptcy.

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