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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: TigerPaw who wrote (4797)	2/15/2003 9:47:30 PM
From: Mephisto	Respond to of 5185

Enron 'bribed tax officials' A crucial report into the collapse of disgraced energy giant Enron has discovered the firm's executives bribed tax officials. The energy giant - once the US' seventh largest firm - paid no income tax between 1996 and 1999 according to the investigation by the Senate Finance Committee. The outraged committee's chairman, Charles Grassley, described a week-long programme of wining and dining, tennis, fishing and golf as part of Enron's strategy to get its own way. Mr Grassley also said the report called into serious doubt the ethics of tax advisers and the "desperate" bankers, accountants and lawyers who helped Enron. "The report reads like a conspiracy novel, with some of the nation's finest banks, accounting firms and attorneys working together to prop up the biggest corporate farce of this century," he said. The investigation provides the first complete story of Enron's efforts to manipulate its taxes and accounting. The findings of the investigation, which have been kept tightly under wraps until now, have been described by senators as "eye-popping", "disturbing", and "barn-burning". Need to reform Enron's bankruptcy was the first in a wave of scandals that swept across corporate America, transforming attitudes towards companies. Enron's failure destroyed the retirement savings of thousands of employees and hurt individual investors and pension funds across the world. Experts now expect broad reform of corporate tax law in the US, an area not previously tackled in the aftermath of the Enron scandal. Mr Grassley said the report read like a roadmap of how to abuse the tax system, but promised to ensure that such abuse could not be repeated. "Enron places the spotlight again on the general ineffectiveness of the current law," Lindy Paull, who led the taxation inquiry, said. The collapse of Enron was particularly shocking because its accounts made the firm appear to be healthy and prosperous. And lawmakers have been scrambling to ensure the deception cannot happen again. IRS overwhelmed? The Finance Committee's ranking Democrat Max Baucus said Enron "overwhelmed the Internal Revenue Service (IRS) with the complexity" of its transactions. "The IRS really couldn't figure it out even if it tried," Mr Baucus said. Mr Baucus said that Enron repeatedly abused the tax code, while the IRS was "kept in the dark and out-manoeuvered". But Ms Paull and Mr Grassley also stressed that some tax officials must have been deliberately collaborating with Enron. The report said Enron profited from 12 large tax deals from 1995 to 2001 that saved the corporation more than $2bn. Guilty parties? The BBC's New York business correspondent, Stephen Evans, says the big question is who the senators will implicate in the deception. Introducing the report, Mr Grassley referred to a "jaw-dropping" amount of benefits paid to Enron executives while ordinary employees were left high and dry. The benefit system also came under fire from Ms Paull, who specifically referred to the perks received by senior staff which included a share in a jet plane. Kenneth Lay, Enron's former chairman and chief executive, maintained his silence when he appeared before the committee. He has not yet been charged. Andrew Fastow, the former chief financial officer, has pleaded innocent to 78 counts of fraud, money-laundering, conspiracy and other charges. But other company employees have alleged that the top executives knew about the damaging schemes being hatched in the finance department. Evidence from the report today may also give federal prosecutors new leads in their battle to weave together a case against Enron. It is now 18 months since the accounting black hole was first revealed, but the complexity of the case has slowed legal proceedings. news.bbc.co.uk

To: TigerPaw who wrote (4797)	2/15/2003 9:53:15 PM
From: Mephisto	Respond to of 5185

Since Kenneth Lay was Bush's biggest supporter and campaign contributor, it is difficult to believe that he will be charged, and he contributed to Democrats as well. Lieberman and the other democrats running for president should be pressed for answers about Enron. Why is Thomas White who ran Enron Energy that lost money now in the Pentagon? If Thomas White couldn't run a profitable company at Enron, why did George W. Bush appoint him as the head of the Army?

To: TigerPaw who wrote (4797)	2/21/2003 2:14:38 PM
From: Mephisto	Respond to of 5185

Merrill, SEC Agree On Enron Settlement Tentative Pact Calls for $80 Million Payment By Carrie Johnson and Peter Behr Washington Post Staff Writers Friday, February 21, 2003; Page E01 Merrill Lynch & Co. said yesterday that it has reached a tentative $80 million settlement with the Securities and Exchange Commission over two financing deals it struck with Enron Corp. in the 1990s. The settlement, which still needs the approval of the SEC commissioners, covers only the company and not current or former Merrill employees who worked closely with Enron executives to craft the transactions. Merrill did not identify the deals in a filing with regulators, but sources said they involved its purchase of three energy-generating Nigerian barges and a separate energy trade between the company and Enron in late 1999. In a criminal complaint filed last year against the company's chief financial officer, Andrew S. Fastow, prosecutors called the Nigerian barge deal a "sham transaction" that helped Enron to "manufacture earnings." The Merrill settlement is the latest in a series of problems for Enron's major bankers, which also include J.P. Morgan Chase & Co. and Citigroup Inc. Their relationships with Enron have been battered in congressional hearings and are the target of shareholder lawsuits seeking billions of dollars in damages. By reaching an agreement with the SEC, Merrill avoids the release of findings by the agency that could be used against it in the court cases filed by investors, experts said. The company neither admitted nor denied wrongdoing in the SEC settlement, its filing said. "We entered into this agreement to put this matter behind us," said William Halldin, a Merrill spokesman. The SEC declined comment other than saying that no date has been set for a commissioners' vote on the settlement. Merrill agreed to pay more than $100 million last year to settle allegations lodged by New York Attorney General Eliot L. Spitzer that the firm's analysts issued tainted research guidance to investors. At least one of its employees remains under scrutiny by federal prosecutors in New York over his role in possible insider trading of ImClone Systems Inc. stock by Martha Stewart. A source at J.P. Morgan Chase pointed out that none of the billions of dollars in deals that Chase arranged for Enron and its partnerships has been mentioned in criminal proceedings. Manhattan District Attorney Robert M. Morgenthau has convened a grand jury to examine Chase's dealings with Enron. Citigroup declined to comment. So did a spokesman for the University of California, which is leading a federal lawsuit against banks and law firms that it alleges helped Enron inflates its books to boost its stock price. Merrill said earlier in public filings that the company is not the subject of a criminal investigation. Sources familiar with a Justice Department probe have said individual employees could be targeted. Lawyers for Robert Furst and Schuyler Tilney, former Merrill executives who worked closely with Enron officials on the deals covered by the proposed SEC settlement, did not return calls. Furst and Tilney invoked their Fifth Amendment rights against self incrimination at a congressional hearing last July. In one deal, Merrill paid $7 million for barges that helped Enron to book a $12 million gain in 1999. A Senate Governmental Affairs subcommittee called the transaction into question last year, saying Enron executives had agreed to take the barges off Merrill's hands, transforming the deal into a sham because Merrill never faced any risk. In handwritten notes obtained by congressional investigators, one Merrill official questioned the deal, asking whether the firm was helping to "aid/abet Enron income [statement] manipulation." At the time of the deal, Merrill was under pressure from Fastow and other Enron executives to fund transactions or lose out on lucrative investment banking fees, congressional investigators found. The barges were ultimately repurchased, not by Enron, but by the LJM partnership Fastow ran. The purchase allowed Enron to make good on its commitment without having to reverse the sale and wipe out the profit it claims, the Justice Department alleged in the Fastow indictment. In a second deal, Merrill purchased $8 million in forward energy contracts from Enron, a transaction that allowed Enron to meet financial targets in 1999. The deal was canceled the following year. G. Kelly Martin, a Merrill senior vice president at the time, said last summer at the Senate hearing: "Had we known at the time what we know today, we would not have conducted business with Enron." © 2003 The Washington Post Company washingtonpost.com