From a flaming liberal to a flaming liberal on ENE. Can you find the connection to Bush?
To:flapjack who wrote (226378)
From: Patricia C. Trinchero Sunday, Feb 10, 2002 2:13 PM
View Replies (1) | Respond to of 226416
HEre is a start:
Insiders reaped pots of gold from development
Group made millions in secret deals, report to panel alleges
By KURT EICHENWALD
New York Times
They call it Southampton Place. To most people in Houston, it is the name of a neighborhood known for expensive homes and influential residents.
But to a small group of executives at Enron Corp., it meant something far different: the opportunity to obtain millions of dollars of cash, fast, with the money coming from Enron's own coffers.
Details of the lucrative investments in Southampton, a limited partnership involved in dealings with Enron partnerships, were disclosed Saturday in a report released by a special committee of Enron's board.
For directors and former employees, they have proved to be some of the most emotionally charged disclosures in the lengthy report: A small group of insiders made millions in profits in secret deals with some of the partnerships that ultimately brought the company to its knees.
Two of the investors were able to transform $5,800 into more than $1 million each in two months, according to the report.
Andrew S. Fastow, the former chief financial officer of Enron and engineer of many of the partnership transactions, transformed a $25,000 contribution from a family foundation into $4.5 million in the same two months.
The deals in early 2000, which involved at least half a dozen Enron employees, violated the company's conflict-of-interest requirements.
Last fall, when the first inklings of Southampton emerged, every senior executive investing in the deal who had not been fired for a role in the partnership problems was terminated.
Until then, according to the report, no top Enron officials knew anything about -- let alone approved of -- the insider deal that came from Fastow's finance division.
The investment was arranged by Fastow and another Enron employee, Michael Kopper, who both live in Southampton Place. Investigators for the committee sought to determine why the two executives offered the opportunity to other corporate insiders, but they said answers eluded them.
A spokesman for Fastow declined comment. Kopper did not return a phone message left at his home.
The small group of investors included only those involved in partnership transactions with Fastow. Kopper, like Fastow, also invested $25,000, through a partnership he called Big Doe -- apparently a nod to the potential profits from the investment.
Other investors included Ben F. Glisan Jr., a former Enron treasurer who helped set up partnership deals with Fastow, and Kristina Mordaunt, a lawyer who worked for Fastow before becoming general counsel of the company's broadband division.
Glisan and Mordaunt were the executives who each put up $5,800 for a return of $1 million.
Two other employees put up smaller amounts and received thousands in return.
Henry F. Schuelke, a lawyer for Glisan, did not return a call for comment. Mordaunt's phone number could not be located in a computer search. However, according to the report, she told the committee she never asked for and never provided anything in return for the Southampton investment.
Glisan also told the committee that Fastow never asked him for favors or consideration for the Southampton investment.
Legal experts said the Southampton transaction sounded similar to a central part of the investment scandal at the investment firm Drexel Burnham Lambert Inc. more than a decade ago.
The man in charge of Drexel's junk-bond operation, Michael R. Milken, offered interests in a partnership called MacPherson Investment Partners LP to a group of mutual fund managers. Some of them invested their mutual funds in other Drexel deals and were convicted on charges that they accepted bribes in exchange for decisions they made for their funds.
The MacPherson case has a role as a precedent in this instance, Meagher said.
Kenneth J. Vianale, principal prosecutor in the MacPherson cases, declined to comment, citing a conflict; his firm has brought class actions against Enron on behalf of shareholders.
With the Enron executives having fiduciary obligations to the shareholders, legal experts said, investigators will try to determine whether anyone appeared to modify their actions because of the investment opportunity.
According to the report from Enron's board committee, Glisan and Mordaunt had roles in negotiating with Fastow's partnerships on Enron's behalf after they received their returns on the Southampton investment.
That month, Glisan became treasurer of Enron, and was involved in partnership deals connected to the company's collapse.
Mordaunt was involved in at least one transaction with a Fastow partnership on behalf of Enron after her investment.
The fact that Enron executives profited from the deal at the expense of their employer raised concerns for the committee.
"We have not seen any evidence that any of the employees, including Fastow, obtained approval from the chairman and CEO under the code of conduct to participate financially in the profits of an entity doing business with Enron," according to the report.
"While every code violation is a matter to be taken seriously, these violations are particularly troubling."
chron.com; |
