Winokur Called To Testify About Enron Activity

Harvard Corporation member Herbert S. “Pug” Winokur ’64-’65 received a subpoena from the Senate’s Permanent Subcommittee on Investigations along with 51 others for their connection to the Enron Corporation, which collapsed in bankruptcy in early December.

Winokur is chair of Enron’s finance committee as well as a company shareholder. Those receiving subpoenas included all of Enron’s board members, and Enron’s auditor, the accounting firm Arthur Andersen.

Senator Joseph I. Lieberman (D-Conn.), the chair of the Senate Government Affairs Committee, announced recently that Congress will investigate, among other things, whether Enron deceived its investors about the company’s financial status.

The hearings are not expected to begin until the spring.

From 1999 to the summer of 2001, when Enron stock was soaring as high as $83 per share, Enron insiders sold off $1.1 billion in Enron stock.

The company’s troubles began this past summer when Chief Executive Officer Jeffrey Skilling resigned unexpectedly on August 14.

Soon questions began to rise about possible conflicts of interest among Enron board members with regards to holding companies set up by Chief Financial Officer Andrew Fastow.

Companies such as LJM Investments, named for the initials for Fastow’s wife and children, were set up to help hide the high costs of the rapidly expanding natural gas and electricity giant.

When public confidence in the company—and Enron’s stock prices—began to slip, Enron was forced to cut its ties with LJM and take a $1 billion write-off.

Concerned with Enron’s huge third-quarter losses and secretive bookkeeping practices, investors began pulling out of Enron and pushed the company into bankruptcy on Dec. 2.

Once one of the hottest commodities on Wall Street, Enron has suffered the most severe financial meltdowns in years.

The Securities and Exchange Commission (SEC) has stepped in to investigate the company along with Congress, and dozens of lawsuits from investors have been filed against the company and members of its executive board.

The bankruptcy is the biggest in the world’s history.

Many of the lawsuits stem from shareholders’ loss of billions of dollars in Enron stock. Many of these plaintiffs are corporations and unions who invested pension funds and 401(K) money in the company.

Winokur is on an Enron committee in charge of all internal investigations at the company, including dealings with the SEC.

The Progressive Student Labor Movement (PSLM) at Harvard has repeatedly used Winokur’s involvement with Enron as part of its public relations campaign against the Corporation.

In November, a student-alumni group formed to address any potential wrongdoing by Winokur. In a recent press release PSLM co-founder Ian Simmons ’99 called on Winokur to give a full account of his involvement in Enron’s collapse.

“In light of the disaster at Enron Corp. and Mr. Winokur’s absolutely central role in it as finance chair, we must ensure that he is not implementing or overseeing irresponsible or fraudulent policies at Harvard, as the Enron board is alleged to have done,” Simmons said.

“I would hope that the Corporation would make a statement on this soon,” said PSLM member Benjamin L. McKean ’02.

Winokur did not return repeated calls for comment.

—Staff writer Joseph P. Flood can be reached at flood@fas.harvard.edu.