CEOs Say They Were Unaware of Enron Ties
The chief executives of J.P. Morgan Chase & Co. and Citigroup Inc. said they were unaware of offshore units central to a U.S. Senate probe into their banks’ ties to energy trader Enron Corp.
Citigroup Chairman and CEO Sanford “Sandy” Weill and J.P. Morgan CEO William Harrison said they had no personal knowledge of offshore entities that congressional investigators allege were used by the banks to assist Enron’s deceptive accounting.
The Senate’s Permanent Subcommittee on Investigations has accused Citigroup and J.P. Morgan of providing Enron with $8.5 billion in loans disguised as commodity trades conducted through offshore firms such as Delta Energy and Mahonia Ltd.
The deals allowed Enron to artificially inflate cash flow and hide debt, which boosted its share price and ultimately led the stock to crash and the company to collapse in December.
The banks’ shares rose after being battered early last week on concerns the companies would be held liable for deals they set up for Enron. J.P. Morgan stock rose 12.8%, or $2.85 a share, to $25.10, while Citigroup stock finished up 8.4%, or $2.57, at $33.31, both on the New York Stock Exchange.
