Bosses schmooze on as the criminal investigation inches closer to the top

Enron: The characters

A year after one of the biggest-ever corporate frauds erupted, the man who presided over the scandal-ridden company can still be found schmoozing with Houston's high society. The former Enron chairman Kenneth Lay and his wife are regulars at the exclusive River Oaks country club.

He may have hoisted a "for sale" sign over some of his 15 homes in Texas and Colorado and he still has to deal with a deluge of civil lawsuits from Enron investors, but Mr Lay is very much a free man.

The same goes for Jeffrey Skilling, Enron's former chief executive. A US Justice Department criminal investigation hasn't prevented love blossoming between Mr Skilling and Enron's former corporate secretary, Rebecca Carter. They married in March. Since Enron filed for Chapter 11 bankruptcy protection, no one involved in the scandal has been jailed. Most Enron watchers, however, believe it is only a matter of time.

The Justice Department's strategy has been to start at the bottom of Enron's executive hierarchy and work up. It hopes to gather enough evidence to press charges against top management.

The investigators have made good use of the plea bargain, in exchange for information. David Duncan, Andersen's auditor with responsibility for Enron, accepted such a deal, which led to his firm being convicted of obstructing justice and subsequently broken up. Michael Kopper, who worked in Enron's finance department, also pleaded guilty to charges of money-laundering and fraud.

The Justice Department is now nearer the top of the Enron tree. Last month it charged Andrew Fastow, chief financial offer, with 78 counts of fraud and money-laundering. Mr Fastow was responsible for developing the so-called "special purpose entities", which were used to conceal debts.

Investigators hope that the threat of a 10-year prison sentence will make him accept a plea bargain and squeal. But he may be reluctant.

A year on and the chatter about Enron in Wall Street and Texas refuses to die down. This is partly fuelled by Sherron Watkins, a former Enron vice-president, who sent Mr Lay a memo expressing worries about Enron's finances. After making the revelation to Congress in February, Ms Watkins secured a book deal and is a regular on the lecture circuit. The suicide of Cliff Baxter, Enron's former vice-chairman, has also fanned the flames of rumour.

For thousands of Enron traders who lost their jobs, life has been tough. Most have lost pensions and their stock options are worthless. Some were poached by Dynegy, which last year came close to buying Enron. But Dynegy has since been hit by its own financial scandal.

Other Enron employees have had better luck. The company's former UK managing director of trading, Richard Lewis, was poached by Barclays, along with two dozen members of his team.

But what of the Enron business? The company, says its website, still hopes to come out of bankruptcy "strong and viable, albeit smaller".

Its shares still trade on the Dow Jones, now as "pink sheets" (shares in a company that fails to meet the minimum market value requirements), but today's price of 12 cents is a far cry from its August 2000 peak of $90.