Wakeham facing more lawsuits over Enron bankruptcy

Lord Wakeham faces the prospect of fresh lawsuits from Enron investors following the US Senate investigation which concluded that he and other directors allowed "questionable" and "high-risk" accounting practices.

The former Conservative cabinet minister and chairman of the Press Complaints Commission is bound to find his return to British public life more difficult following the latest revelations. The 69-year-old peer is already among those named in legal action by 430 former Enron staff demanding restitution for hundreds of millions of dollars which disappeared from their pension funds. But further litigation is now likely, company sources said.

Lord Wakeham is to give evidence to an inquiry by the Commons Treasury select committee into City regulation. The peer, who resigned his PCC chairmanship after the Enron scandal broke, was said to be unavailable for comment last night.

The company's directors had claimed they were kept unaware of the actions by employees which led to the world's biggest corporate bankruptcy, a collapse that left debts reckoned about £27.5bn.

But the Senate permanent sub-committee on investigations stated: "Much that was wrong with Enron was known to the board". This included "high-risk accounting practices, inappropriate conflict of interest transactions, extensive undisclosed off the books activity and excessive executive compensation".

It added: "By failing to provide sufficient oversight and restraint to stop management excess, the Enron board contributed to the company's collapse and bears a share of the responsibility for it."

The 61-page report names Lord Wakeham as among several directors whose independence could have been compromised by lucrative "consultancy payments".

As energy minister in the Thatcher government, Lord Wakeham authorised the building by Enron of a gas-fired power station in Teesside in 1990. Four years later he joined the Enron board as a non-executive director. Lord Wakeham, who also served as former Prime Minister Baroness Thatcher's chief whip, was on the audit committee, which is supposed to vet the accounts. He received a monthly retainer of £4,100 and extra payments which came to £ 241,000 a year.

The report said the directors of the audit committee were told by auditors from Arthur Andersen in 1999 that Enron's accounting methods were "pushing the limits" of normal practice, but nothing was done about this.

No one from the company has faced criminal charges so far, although three British bankers who dealt with its partnerships have been accused of fraud and auditors Andersen have been convicted of obstruction of justice.

With Enron among a series of corporate collapses to have hit the US, in New York today President George Bush is to make a speech today about corporate responsibility.

Enron's former chief executive Kenneth Lay, a former ally and financial donor to Mr Bush, has come in for particularly severe criticism in the report for "abusing" his line of credit and withdrawing $77m (£50m) in cash from the company in one year and replacing it with company stock.

Although Lord Wakeham stood down as chairman of the PCC at the beginning of the year, he will keep his £ 156,000 a year salary until September when he formally departs. The Tory peer has also stepped down as chairman of the recruitment consultancy Michael Page International, but stayed on as deputy chairman.