Ex-Enron, Merrill Workers Indicted
A former Enron Corp. accountant and a former Merrill Lynch & Co. vice president were indicted Wednesday by a U.S. grand jury in Houston on charges that they plotted to defraud investors in a deal that allowed Enron to report a phony $12-million profit.
Former Enron employee Sheila K. Kahanek and ex-Merrill Lynch Vice President William R. Fuhs were charged with conspiring to commit fraud through the 1999 sale of Nigerian barges. Fuhs also was charged with making false statements and obstructing the Enron grand jury.
“The arrangement allowed Enron to fraudulently enhance the year-end 1999 financial position that it presented to the public,” Assistant U.S. Atty. Gen. Christopher Wray said in a statement. “It also enabled certain Enron executives to receive unwarranted bonuses.”
The indictment was the latest in a series of charges stemming from the Nigerian barge sale. Three former Merrill Lynch executives pleaded not guilty last month and former Enron Treasurer Ben F. Glisan pleaded guilty and was sentenced to five years in prison.
Thus far, 18 former Enron employees have been charged in the accounting scandal that drove the company into bankruptcy protection.
The barge deal involved the “parking” of Enron assets with Merrill Lynch, prosecutors said. Unable to sell an interest in electricity-producing barges moored off the coast of Nigeria, Enron had Merrill Lynch purchase the interests so the energy trader could record the revenue for its 1999 financial filings and prop up its share price, prosecutors said.
Enron “fronted” 75% of the purchase price to Merrill Lynch, the government said.
Prosecutors charge that a secret, oral agreement called for Enron to return Merrill’s investment plus a 22% fee within six months.
Kahanek was “one of the lead employees to effectuate Enron’s Nigerian barge transaction with Merrill Lynch,” prosecutors said. She reprimanded another Enron employee for creating a record of the “secret” Merrill-Enron deal and ordered it destroyed, prosecutors alleged.
Fuhs was charged with lying to the FBI, prosecutors said.
The new indictment also charged Daniel O. Boyle, former Enron vice president for global finance and lead employee on the barge transaction, with conspiracy to commit wire fraud.
