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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (98062)	7/27/2002 12:11:52 PM
From: Smart_Money	Read Replies (2) \| Respond to of 99280

MER heavily involved in Enron. One of the MER executive is missing. Over 100 MER executives were involved. biz.yahoo.com Reuters Business Report Merrill Banker Won't Testify About Enron By Brian Kelleher and Kevin Drawbaugh NEW YORK/WASHINGTON (Reuters) - Merrill Lynch & Co. Inc. put one of its investment bankers on leave on Friday after he said he would not testify to Congress in a probe of Enron Corp.'s collapse and allegations that Merrill worked side-by-side with the bankrupt energy trader. ADVERTISEMENT The world's largest brokerage placed Schuyler Tilney on administrative leave after his attorney advised him not to testify to the Senate Permanent Subcommittee on Investigations at a hearing set for Tuesday. Enron's Dec. 2 bankruptcy began a remarkable and continuing series of corporate scandals that have wounded investor trust and contributed to a steep decline in U.S. stock markets. Three Merrill executives, including Tilney, were listed as witnesses scheduled to appear before the subcommittee, with two of the witnesses expected to refuse to testify based on their Fifth Amendment rights against self-incrimination. One witness that the subcommittee wants to hear from was said to be missing and sought by law enforcement officials. It was unclear if the witness was one of the three named on the Senate agenda. Tilney was subpoenaed within the past 24 hours by the subcommittee, which held a hearing last Tuesday on Enron's links to two other Wall Street banking giants: Citigroup Inc. and J.P. Morgan Chase & Co. Inc. . "Without the support and assistance of major financial institutions, Enron could not have engaged in the extent of the deceptions that it did," said subcommittee Chairman Carl Levin, a Michigan Democrat, in a statement. WIDE RANGING PROBES Merrill said that, based on what it knew, its employees acted properly in deals with Enron. "However," Merrill said, "it (Merrill) is placing the employee on administrative leave because the company's policy is to cooperate fully with governmental and regulatory inquiries," New York-based Merrill said in a statement. Tilney, 46, decided not to testify after he learned the Justice Department was probing a deal that the Senate is reviewing. The Justice Department has told Merrill it is not a target of the investigation, a company spokesman said. Texas-based Enron has been under investigation by the Securities and Exchange Commission since last fall and by the Justice Department since January. The wide-ranging probes encompass many of Enron's former business partners and practices. Merrill said its dealings with Enron were limited. It said they included a $7 million investment in a company set up to operate energy generation barges. It said it also was private placement agent for an Enron-linked partnership known as LJM2, a venture seen as a key target of the subcommittee's inquiry. "Merrill Lynch strongly believes its dealings with Enron and LJM2 were appropriate and proper based on what we knew at the time," the bank said in a statement, adding it is fully cooperating with the subcommittee. Tilney, head of Merrill's energy and power group, was involved in the energy generation barges venture. His wife, Elizabeth, was an Enron executive and a close associate of ex-CEO Ken Lay, sources familiar with the matter said. CLASS ACTION LAWSUIT Tilney's attorney, Robert Trout, wasn't immediately available for comment. Robert Furst, a former Merrill managing director, has also said he will not testify, Merrill said. Both Furst and Tilney were listed as witnesses to appear on Tuesday in a statement issued by the subcommittee. Also listed was Kelly Martin, a Merrill senior vice president. Subpoenas were issued to both Tilney and Furst within the past 24 hours, said a subcommittee spokeswoman. Tilney's attorney accepted his subpoena, but Furst's did not accept his, said the spokeswoman. According to a massive class action lawsuit filed in April by Enron investors against former Enron executives and other defendants, including Merrill, the investment bank: --played a key role in creating and funding the LJM2 partnership central to many of Enron's questionable ventures; --allowed some of its top executives, including Tilney, to invest personally in the LJM2 venture; --knew LJM2 was designed to keep debt off Enron's balance sheet to help inflate its profits and boost its stock price; --reaped enormous profits from banking and advisory fees from its extensive work for Enron; --helped Enron create the troubled Azurix water venture; --was lead underwriter in several Enron public offerings. The lawsuit alleged that Merrill "provided investment banking services to Enron, helped structure and finance one or more of Enron's illicit partnerships or SPEs (special purpose entities), while its securities analysts were issuing extremely positive reports on Enron." (Additional reporting by C. Bryson Hull in Houston) Financial News Desk, (646) 223-6124))