Justice Department Opens Criminal Probe of Enron - TheStreet

The federal government opened an investigation into whether the collapse of energy giant

Enron

(ENE)

involved criminal wrongdoing.

A Justice Department task force opened a criminal probe into the company, which declared bankruptcy last month amid a liquidity crisis caused by revelations about the company's use of off-balance sheet partnerships to limit its debt exposure.

In addition to the criminal probe, Enron faces civil investigations by the

Securities and Exchange Commission

and Labor Department and has been subpoenaed by Congress. The Justice Department formed a national task force to be headed by lawyers in its criminal division and which will include prosecutors in Houston, San Francisco, New York.

A lawyer for Enron told the

Associated Press

the company welcomes the inquiry. "We want to get to the bottom of this too," said Robert Bennett. "A lot of decent and honorable people work at Enron and we should wait until the facts are out."

In addition to leaving many large banks with sizable credit exposures and roiling the energy markets, Enron's bankruptcy, the biggest in U.S. history, devastated many of its own workers, who kept most or all of their retirement savings in Enron stock.

Congressional inquiries have focused on the company's financial statements and have included testimony by Enron's auditors, who said the company failed to provide it with timely information about its partnerships. "It is not clear why the relevant information was not provided to us. We are still looking into that. On Nov. 2, 2001, we notified Enron's audit committee of possible illegal acts within the company," Joseph Berardino, chief executive of Andersen, told a congressional committee on Dec. 12. Enron has said it acted properly with regard to disclosure.

Meanwhile, about two dozen companies involved in Enron's bankruptcy are trying to get a bankruptcy court judge to postpone the sale of its energy-trading business. Financial advisers to Enron had planned to begin an auction of the unit Thursday and possibly announce a winning bidder as early as tomorrow. Suitors are said to include

Citigroup

(C) - Get Report

, UBS> and

BP

(BP) - Get Report

. The creditors want the auction postponed while they secure guarantees that any proceeds will be used to pay debts owed to them.