Wakeham suffers Enron body blow

The Tory peer and former MP, who acted as Margaret Thatcher’s cabinet fixer, and as a member of Enron’s audit committee, is accused of ignoring warnings about its ‘questionable’ and ‘high-risk’ accounting practices.

It opens the way for multi-million dollar lawsuits against Lord Wakeham and other directors from 430 former Enron staff seeking to recover cash lost from their pension funds.

The report, by the US Senate’s permanent sub-committee on investigations, dismissed the claims by Lord Wakeham and his fellow directors that they had been kept in the dark by accounting officers about the sleights of financial hand that led to the world’s biggest financial collapse before last month’s WorldCom failure.

It said the directors had ignored more than a dozen ‘red flags’ since 1999 which should have led to ‘hard questions’ being asked. It singled out Lord Wakeham as one of several directors who, in view of his professional experience, would have spotted the problem but whose independence could have been compromised by lavish ‘consultancy payments’, which in his case amounted to up to £241,000 a year with much of it in stock options.

The report said: ‘Much that was wrong with Enron was known to the board, from high risk accountancy practices and inappropriate conflict of interest transactions to excessive undisclosed off-the-books activity and excessive executive compensation.’

Lord Wakeham – who stood aside as chairman of the Press Complaints Commission after the scandal broke – is soon to be called to give evidence to the House of Commons Treasury Committee in its investigation into City regulation in the wake of the Enron and WorldCom collapses