February 15,2002

Grassley: Enron Tax Disclosure Should Jumpstart Congressional Action

WASHINGTON -- Sen. Chuck Grassley, ranking member of the Committee on Finance,issued the following comment regarding the agreement he and Chairman Max Baucus have reachedwith the Enron Corp to publicly disclose its tax records. The Joint Committee on Taxation has alsobeen directed to review Enron’s tax returns and report its findings to the Finance Committee.

Last August, Grassley released the draft of legislation he is preparing with Sen. Baucus tobetter police tax shelters. The draft is being revised in light of Enron. Grassley also is draftinglegislation to tighten pension laws and better protect workers.

“The agreement with Enron is important because it will ultimately lead to a publicunderstanding of what happened at Enron with taxes and pensions.

“Our investigation needs to find out whether Enron’s actions were legal, somewhatquestionable, highly questionable, or even illegal. In the end, what’s legal for any company couldbe the most shocking of all. Public disclosure of questionable tax dealings should give Congress thepolitical will to act this year on fundamental reforms. We need to put Main Street before K Streetby shutting down tax shelters and closing loopholes used to avoid paying taxes owed.

“The documents we’ll get will also give us a clear picture of how Enron managed itsemployees’ pension plans. We need to know what Enron did so we can make the pension lawsstronger and prevent future Enrons."

Attachments: February 14, 2002 Fred T. Goldberg, Jr. letter to Sens. Baucus and Grassley
February 15, 2002 Sens. Baucus and Grassley letter Lindy L. Paull, Esq.
February 14, 2002

Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue N.W.
Washington, D.C. 20005
Hon. Max Baucus
Committee on Finance
United States Senate
Washington, DC 20510

Hon. Charles E. Grassley
Ranking Member
Committee on Finance
United States Senate
Washington, DC 20510

Dear Senators Baucus and Grassley:

Following on conversations with your staff, I have been authorized to advise you that Enron intendsto provide the Finance Committee with consent under Code section 6103 to public disclosure of itsrelevant confidential tax return information, along the lines described below.

We understand that the Committee is interested in determining whether there are, in the events thatgave rise to Enron's bankruptcy, significant tax policy issues of relevance beyond Enron's particularcircumstances such that they may need to be addressed through changes to the federal tax laws. Theconsent will be intended to apply to information contained in Enron's tax returns and relatedmaterials which pertains specifically to such issues, and will contemplate the publication of suchinformation in one or more Committee Reports addressing those issues and any proposed legislativerecommendations that the Committee develops as part of its review of such issues, including inhearings that the Committee may conduct following issuance of the Reports.

Working with your staff, we anticipate sorting out the specific terms of Enron's consent in the verynear future. We look forward to cooperating fully with your staff and the staff of the JointCommittee on Taxation during the course of what we anticipate will be an orderly and constructivereview.


Fred T. Goldberg, Jr.
February 15, 2002
Lindy L. Paull, Esq.
Chief of Staff
Joint Committee on Taxation
1015 Longworth House Office Building
Washington, DC 20515

Dear Ms. Paull:

Recent press reports have raised troubling questions about Enron Corp. and related entities'("Enron") compliance with the Federal income tax laws, including the use of entities in tax havencountries, other special purpose entities, and questionable tax shelter arrangements. According tosome press reports, Enron may have used such arrangements to improperly avoid paying corporateincome taxes.

We are also concerned by reports that thousands of Enron employees have suffered pension lossesin recent months while corporate insiders appear to have reaped substantial profits during that sameperiod. Qualified pension plans and many other compensation arrangements receive considerabletax benefits and are otherwise facilitated by the Federal tax laws. Recent reports about Enron raiseconcerns that the objectives behind these tax law provisions are not being fulfilled.

Accordingly, pursuant to Internal Revenue Code section 8022, we direct the staff of the JointCommittee on Taxation to undertake a review of Enron's Federal tax returns, tax information, andany other relevant information as you deem necessary, from 1985 to the present, to assist us inevaluating if the Federal tax laws facilitated any of the events or transactions that preceded Enron'sbankruptcy. The review should examine the adequacy of present tax law, particularly in the areasof tax shelters and offshore entities. It should also include a review of the compensationarrangements of Enron employees, including tax-qualified retirement plans, nonqualified deferredcompensation arrangements, and other arrangements, and an analysis of the factors that may havecontributed to any loss of benefits and the extent to which losses were experienced by differentcategories of employees.

We ask that you transmit your findings, and recommendations for reform, to the Senate Committeeon Finance as soon as practicable. We also request that you keep the Committee updated on theprogress on your study and advise us on any problems you may have in securing timely access to theinformation needed to perform this review.

We want to thank you and your staff for undertaking this important review and look forward toreceiving your report.

Sincerely yours,

Max Baucus, Chairman

Charles E. Grassley, Ranking Member