The vote was unanimous.
It was not immediately clear what date the panel would set for Lay to appear - but there was little expectation that he would actually provide answers to lawmakers' questions.
"I'll bet you a dollar to a doughnut that he doesn't testify and invokes his right under the Fifth Amendment," said Sen. John Breaux, D-La. The amendment guarantees protection against self-incrimination.
The committee action was the latest development in what has taken on the appearance of a congressional cottage industry - a dozen committees and subcommittees in the House and Senate probing various aspects of the biggest bankruptcy in the nation's history.
Millions of investors lost money - and thousands of current and former Enron employees lost the great bulk of their retirement savings when the company collapsed. An internal board committee issued a report over the weekend that blamed senior management for failing to provide proper oversight into a complex web of partnerships that helped the company hide debt and report unrealistic profit figures.
The taint has spread beyond the Houston-based company, and the head of Arthur Andersen was appearing at a separate congressional hearing during the day to discuss the shredding of Enron documents. Andersen was Enron's accounting firm.
"It is clear that something very tragic and disturbing happened at Enron," Joseph Berardino, the Andersen chief, said in prepared testimony. "All involved with Enron must face up to what happened and take appropriate responsibility."
At the same time, he said Enron did not provide critical information to its Andersen auditors about one of the partnership's arrangements with Barclays Bank of Britain. He said that if the auditors had been given that information in 1997, Andersen would have objected to Enron's accounting for the partnership.
The vote in the Senate committee came little more than 24 hours after Lay was to have appeared. He canceled his testimony on short notice after his lawyer said the proceedings had taken on a prosecutorial tone.
"We have no choice," but to issue the subpoena, said Sen. Byron Dorgan, D-N.D., chairman of the subcommittee that was to have heard from Lay. "I regret that we have gotten to this point."
Republicans agreed. "It is my judgment that Enron was running a gargantuan pyramid scheme within the context of a publicly traded corporation," said Sen. Peter Fitzgerald, R-Ill.
To underscore the bipartisan determination to investigate, the formal proposal for the subpoena was advanced by Sen. Ted Stevens of Alaska, second-ranking Republican on the Democratic-controlled committee.
A second congressional committee has also announced plans to issue a subpoena to compel Lay's testimony.
While the committee vote was unanimous, there was some partisan sparring about an allegation from Sen. Ernest Hollings, D-S.C., the chairman, that the Bush administration and Enron had participated in a "cash and carry" relationship.
"I am concerned about the political rhetoric that has occurred," said Sen. Kay Bailey Hutchison, R-Texas. "I just hope that we are going to use this committee to gather information and not to ventilate on political issues that really have no place here."
But Hollings restated his claim, and then added that the Enron debacle should provide Congress with the impetus to pass legislation reducing the role of money in political campaigns.
Apart from Congress, the Justice Department and the Securities and Exchange Commission are investigating the collapse of Houston-based Enron, and President Bush has called for an overhaul of laws designed to protect retirement savings plans known as 401(k)s.
Hollings said previously that a special prosecutor should investigate Enron. He said the Justice Department could not act objectively because of Bush administration officials' ties to the company.
The Justice Department said in a statement that it sees no reason to appoint a special counsel to investigate Enron. "No person involved in pursuing this investigation has any conflict, or any ties that would require a recusal," the department said.
Lay, who lives in Houston but also has homes elsewhere, including Galveston, Texas, and Aspen, Colo., resigned Monday from Enron's board after relinquishing his position as Enron chairman on Jan. 23. Enron and Lay have been among Bush's largest campaign contributors.
Opening a week of Enron hearings, lawmakers made clear Monday that they wanted to learn more about what Lay and Enron's board of directors knew about the complex web of questionable partnerships that Enron established to hide financial losses and hundreds of millions of dollars of debt.
Senior Enron executives involved in the partnerships "enriched themselves ... by tens of millions of dollars that they should never have received," William Powers, the dean of the University of Texas Law School who headed an internal Enron investigation, told a House Financial Services subcommittee Monday.
Powers was to be questioned Tuesday by the House Energy and Commerce investigations subcommittee on his findings, while the president of Arthur Andersen LLP, Enron's former accounting firm, was expected to be grilled by a Financial Services subcommittee.
The internal investigation, according to Powers, found that there was a "systematic and pervasive" attempt by senior Enron mangers to "misrepresent the company's financial condition" through the use of partnerships that had no economic value to Enron except to hide debt and artificially inflate profits on Enron's balance sheet.
Powers said Lay approved the arrangements under which Enron's chief financial officer, Andrew Fastow, created the partnerships and that the Enron chairman "bears significant responsibility" for not preventing the abuses that this "inherent conflict of interest" created.
The internal report also chided Enron's board of directors for allowing the partnerships - especially one headed by Fastow - and for not more aggressively pursuing questions about their operation. While the board was misled about some of the activities, others "should have raised red flags," Powers, who was named to the Enron board in October, told the lawmakers.
http://accesswdun.com/article/2002/2/199212