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Lay takes the Fifth
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February 12, 2002: 11:15 a.m. ET
Former Enron CEO refuses to testify even as a new report raises more questions.
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NEW YORK (CNN/Money) - Former Enron Corp. CEO Kenneth Lay appeared before a Senate panel Tuesday and expressed regret about what happened to the bankrupt energy company but declined to testify on the advice of his lawyer, as expected.
Lay appeared before the Senate Commerce Committee after being subpoenaed about the collapse of Enron, which in December filed the largest bankruptcy case in U.S. history. Details
Lay's appearance comes the same day the Wall Street Journal reported the discovery of an internal Enron document showing for the first time that Lay directly participated in some of the accounting practices that eventually led to its ignominious collapse.
The document, a deal-approval sheet from June 2000 which Lay appears to have signed, authorizes a transaction between Enron and the LJM2 Co-Investment LP, the Journal said. LJM2 was one of several special purpose entities (SPEs) designed to move assets and liabilities off Enron's books. Details
In other Enron developments:
The House Financial Services Committee late Monday drafted the first piece of Enron-inspired legislation, a bill to establish an accounting oversight board composed of a two-thirds majority of non-accountants and increasing the Securities and Exchange Commission's budget by 60 percent.
According to Reuters, which obtained a copy of the drafted bill, the new body would have authority to sanction both accountants and their clients. The bill is seen as a kind of answer to the SEC Chairman Harvey Pitt's proposal, which has been criticized by Sen. Ernest Hollings, D-S.C., and others. Details
Rep. John Dingell, D-Mich., ranking member of the House Energy and Commerce Committee, added to doubts about the testimony of another former Enron CEO, Jeffrey Skilling, who claimed last week that he did not know Enron used its off-the-book partnerships to hide debt.
Dingell sent a letter Monday to Skilling's attorney, Bruce Hiler, in which he pointed to a document from an October 2000 meeting that shows the former CEO knew transactions were used to inflate profits at Enron. Details
In the latest development in a case that looks increasingly similar to Enron's, Qwest Communications Inc. (Q: Research, Estimates) has been subpoenaed by the SEC for information about Global Crossing Inc.
Global Crossing recently filed the fourth-largest bankruptcy in U.S. history and is under investigation by the SEC and the FBI for accounting practices similar to those of Enron's. Details
Economists on Monday discussed the impact of scandals at Enron, Global Crossing and others on the U.S. economy's nascent recovery from its first recession in a decade.
Though it could hurt the ability of companies to borrow money and could shake consumer confidence and stock prices, the "Enron effect" won't likely be enough to stop a recovery, economists said - as long as there aren't too many more nasty surprises out there. Details 
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