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Enron, US Senate panel strike deal on tax records

Enron Corp gave US Senate investigators permission on Wednesday to use the company's confidential tax records in their probe of the energy trader's collapse, but set restrictions on how the information can be used and released.

The agreement, signed by Enron's chief financial officer and the leaders of the Senate Finance Committee, calls for the now-bankrupt company to hand over tax returns and other internal documents dating back to 1985.

But Enron will retain the right to assert "privilege" or raise legal objections to block the release of certain material, and Senate investigators will be barred from disclosing information "except through official reports, meetings or other hearings," according to the agreement, which takes effect on Thursday.

Despite the restrictions, the Finance Committee welcomed the agreement, saying it would clear the way for the panel to step up its investigation of whether Enron, President George W Bush's biggest financial backer in the 2000 campaign, improperly avoided paying federal income taxes or exploited tax loopholes that may need to be closed.

"Now we can stop negotiating and start investigating," said Sen Chuck Grassley, the ranking Republican on the Finance Committee.

"This formation will be important as we consider legislation to rein in corporate tax shelters."

Other congressional committees are investigating the company's dealings with special partnerships, which Enron's own investigators found were used to hide debt and inflate profits.

The Justice Department and the Securities and Exchange Commission also are investigating the collapse of what was once the seventh-largest US company. Enron filed the largest-ever US bankruptcy on December 2.

Enron tentatively agreed three weeks ago to let the Finance Committee use the tax records. But the company held off signing a formal Internal Revenue Service release, pressing for limits on what information is released, congressional aides said.

While already empowered to investigate Enron's tax returns, the committee needed the company's consent to use the records and audits at its hearings and in its investigative reports.

Wednesday's agreement was signed by Enron chief financial officer Raymond Bowen, Finance Committee chairman Sen Max Baucus, a Montana Democrat, Grassley, and Lindy Paull, the chief of staff for the congressional Joint Committee on Taxation.

Citizens for Tax Justice, a labour-backed tax research group, analysed Enron's financial reports for 1996 through 2000 and found the company did not pay US income taxes in four of those five years, although other analysts have disputed those findings.

Robert McIntyre, head of the tax watchdog group, said Enron received tax refunds totaling close to $400 million in the period. He said he found that Enron had used hundreds of subsidiaries in tax-haven countries, as well as deductions for stock options, to avoid paying taxes.

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