Self-incrimination and Congressional Hearings - Roberto Iraola

• Publication year: 2003

Self-incrimination and Congressional Hearingsby Roberto iraola^*

It is the[] unremitting obligation [of citizens] to respond to subpoenas, to respect the dignity of the Congress and its committees and to testify fully with respect to matters within the province of proper investigation. This, of course, assumes that the constitutional rights of witnesses will be respected by the Congress as they are in a court of justice.¹

The remedy for unseemly conduct, ifany, by Committees ofCongress is for Congress, or for the people; it is political and not judicial.²

[A] witness may have a reasonable fear of prosecution and yet be innocent of any wrongdoing. The [Fifth Amendment] privilege serves to protect the innocent who otherwise might be ensnared by ambiguous circumstances.³

I. Introduction

On December 2,2001, Enron Corporation ("Enron"), America's seventh largest company, filed for bankruptcy protection following a massive sale of the company's stock precipitated by earnings restatements revealing approximately $600 million in debt.⁴ The collapse of Enron spawned inquiries by at least sixteen congressional committees.⁵ The Department of Justice, the Securities and Exchange Commission ("SEC"), the Department of Labor, the Internal Revenue Service, and the Federal Energy Regulatory Commission also opened investigations.⁶ As the inquiries by the various congressional committees proceeded, current and former Enron executives, as well as employees of Arthur Andersen LLP, Enron's auditing firm, were summoned to testify. Many of those called declined to do so, invoking their Fifth Amendment privilege against self-incrimination.⁷

One of the witnesses summoned before Congress was former Enron Chairman and Chief Executive, Kenneth Lay. He was subpoenaed⁸ to testify before the Senate Commerce Committee, but publicly announced, prior to his scheduled appearance, that he would assert his Fifth Amendment privilege.⁹ In compliance with the subpoena, Mr. Lay appeared before the committee on February 12, 2002.¹⁰ He then sat for over an hour with his attorney, as senators from both sides ofthe aisle vilified his stewardship of the company and scolded him for refusing to testify.¹¹ Before discussing those remarks, it bears noting that the committee not only understood that Mr. Lay would decline to testify on advice of counsel,¹² but that some members deemed such a decision reasonable in light of all the facts and circumstances. For example, at the time of the hearing, Senator John Breaux (D-LA) stated:

I'm disappointed . . . that Mr. Lay is not going to be testifying. I don't think anybody in Congress or probably in Washington or anywhere else really thought that he was going to testify. If I were his attorney, I'd certainly be advising him to take the Fifth Amendment, which is what he's going to do this morning based on advice of counsel.¹³

Nonetheless, other members of the committee felt that Mr. Lay's compelled appearance provided them with a good opportunity to speak with Mr. Lay. For example, Senator Barbara Boxer (D-CA) remarked: "I know you're not going to talk to the committee. You have a right not to. But I have a chance to talk to you, so that's what I'm going to do, talk to you."¹⁴ The "talking," as demonstrated below, consisted of committee members maligning Mr. Lay's stewardship of Enron and chiding him for invoking his Fifth Amendment privilege. The following statements illustrate the point:

— Senator John McCain (R-AZ): Mr. Lay, I regret that you've chosen not to explain to this committee, to the American public and to your former employees how you and others in senior management on the board of Enron apparently failed to completely fulfill your responsibilities.¹⁵

— Senator Byron Dorgan (D-ND): Mr. Lay's attorneys have told us that he will invoke his Fifth Amendment right against self-incrimina-tion and he certainly has that right. I must say I'm disappointed by that decision. I think Mr. Lay has a story to tell. We and the American people would like to hear that story.¹⁶

— Senator Peter Fitzgerald (R-IL): I was disappointed to learn that you, Mr. Lay, have no intention of testifying this morning, because I have lots of questions that I think are important to ask you. And you know what, Mr. Lay? I thought that after any role you might have played in bankrupting a hundred-billion dollar-a-year company, devastating the retirement savings of thousands of your employees, spreading fear through millions of Americans concerned about their investment, and calling into question the very integrity of our capital markets— I thought that you might think it was important to answer those questions, too. But apparently you do not. Apparently you don't think that it's the least you can do . . . .

So what have I concluded? Mr. Lay, I've concluded that you're perhaps the most accomplished confidence man since Charles Ponzi. I'd say you were a carnival barker, except that wouldn't be fair to carnival barkers. A carnie will at least tell you up front that he's running a shell game. You, Mr. Lay, were running what purported to be the seventh largest corporation in America.¹⁷

— Senator Ron Wyden (D-OR): I strongly support the constitutional protections afforded Mr. Lay and all witnesses, but respectfully submit that the question shouldn't be what do the Enron executives have to gain by testifying, but rather it is what they owe the American people at this point.¹⁸

— Senator Olympia Snowe (R-ME): I, too, join my colleagues in expressing regret that Mr. Lay will not be testifying . . . . There are a number of implausibilities that need to be addressed. You, as CEO, had the responsibility of creating a culture of honesty, responsibility, integrity, and trust, and obviously that didn't happen in this instance, and now it is the employees and the investors who are bearing the brunt of these massive schemes and failures.¹⁹

— Senator Max Cleland (D-GA): Mr. Lay, I truly regret your failure to appear before this committee last week and your decision not to answer any questions today. It seems that the veil of secrecy that has surrounded Enron decisions at the top continues.²⁰

— Senator Barbara Boxer (D-CA): Mr. Lay, my state was bled dry by price gouging. Many pension plans went under—I shouldn't say

went under—lost hundreds of millions of dollars because there was a limit on what they could put into Enron—I might say, a limit that I support in 401(k)s as well. And what you did to the employees was without conscience. That's how I feel.²¹

— Senator Jean Carnahan (D-MO): Somehow, Enron got off course, and I'm sorry you have chosen not to help us uncover what went wrong, because in failure, there are always lessons to be learned. But despite your unwillingness to speak, I will continue to ask the question that I find so terribly haunting, a question that gets to those core values that define us as Americans; I want to know why no one in authority at Enron stood up and said, "This is wrong."²²

When finally permitted to testify after these remarks and a reference by Senator Hollings to a culture of corruption exemplified by "Kenny Boy" and "cash-and-carry government,"²³ Mr. Lay expressed "profound sadness about what . . . happened to Enron, its current and former employees, retirees, shareholders and other stakeholders."²⁴ He further stated:

I am deeply troubled about asserting these rights, because it may be perceived by some that I have something to hide. But after agonizing consideration, I cannot disregard my counsel's instruction. Therefore, I must respectfully decline to answer, on Fifth Amendment grounds, all of the questions of this committee and subcommittee and those of any other congressional committee and subcommittee . . . . I respectfully ask you not to draw a negative inference because I am asserting my Fifth Amendment constitutional protection on instruction of counsel.²⁵

Immediately thereafter, Mr. Lay was excused.²⁶

More recently, and at the other end of the spectrum in terms of the current procedure followed by a committee when confronted with the historically familiar ritual of having a witness invoke his Fifth Amendment privilege at a hearing in front of television cameras, was the appearance of Dr. Samuel Waksal in June 2002 before the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee.²⁷ On June 13, 2002, that subcommittee held a hearing to examine whether ImClone Systems, Inc. ("ImClone"), a biotechnology company, had misled the Food and Drug Admininistration when seeking approval of a new drug to treat colorectal cancer.²⁸ One of the witnesses subpoenaed to appear was Dr. Waksal, who had been arrested on insider trading charges the previous day.²⁹

After a panel consisting of two witnesses testified, the committee's chair, Representative James Greenwood (R-PA), called Dr. Waksal.³⁰ Upon being sworn, Dr. Waksal advised the subcommittee that he intended to assert his "constitutional rights and respectfully decline to answer."³¹ The following colloquy then ensued between Chairman Greenwood and Dr. Waksal:

REP. GREENWOOD: We thank you, sir. We respect your right to do so. But let me be clear, Dr. Waksal, are you refusing to answer the question on the basis of the protections afforded to you under the 5th Amendment to the United States Constitution?

DR. SAMUEL WAKSAL: Yes.

REP. GREENWOOD: And, Dr. Waksal, do you intend to invoke your 5th Amendment rights in response to any and all questions posed to you here today?

DR. SAMUEL WAKSAL: Yes.

REP. GREENWOOD: Okay. Then you are excused from the witness table at this time, but I advise you that you remain subject to the processes of this committee and, if this committee needs such, then we may recall you, sir.

DR. SAMUEL WAKSAL: Thank you.

REP. GREENWOOD: Okay. You're excused, sir.³²

Less than two weeks after the ImClone hearing, WorldCom Inc. ("WorldCom"), the country's second largest telecommunications company, announced...