Enron, Global Deal Disguised, Paper Says

Enron Corp. and Global Crossing Ltd. created a transaction to disguise a loan and to help the companies manage Wall Street expectations, the New York Times reported, citing unidentified executives and traders.

In the fourth quarter of 2000, the companies reworked what was originally a noncash agreement to swap fiber-optic access and services into a $17-million sale of network access to Enron, the paper said. Enron would pay upfront and Global Crossing would buy about $17 million in services from Enron to be paid over eight years, the paper said.

Reliant Resources Inc. served as a middleman in the deal, which closed in March 2001, the paper said. Enron reported a $5-million profit from the transaction, the Times said, citing an unidentified former Enron executive. The transaction was part of Enron’s broad-based effort to manage Wall Street expectations, the paper reported, citing an unidentified former company executive.

Reliant Resources was expected to receive about $300,000, and Enron paid its share through network-access swaps, the paper said, citing unidentified executives. An Enron spokesman declined to comment, the paper said. Unidentified Global Crossing and Reliant Resources officials acknowledged a transaction with Enron took place, the Times said.