Senator Assails Citigroup, MorganDec 10, 2002 | Palm Beach Post
Citigroup Inc. and J.P. Morgan Chase & Co. knowingly aided Enron Corp. in hiding debt and avoiding taxes by using previously undisclosed "sham" transactions, the head of the Senate Permanent Subcommittee on Investigations said Monday.
The financial institutions "helped Enron deceive the investing public as well as Enron employees and stockholders," Sen. Carl Levin, D-Mich., said as he outlined issues to be explored at a hearing Wednesday.
The companies used "sham contrivances to make Enron look more financially healthy than it really was, violating accounting standards," Levin said
Levin's panel has been scrutinizing the factors that led to the Houston-based energy company's financial collapse since it filed for bankruptcy one year ago. In July, Citigroup and J.P. Morgan were criticized during another Enron hearing for allegedly doing too little to alert Enron investors.
But subcommittee investigators said evidence now shows the two financial institutions aided Enron in falsely inflating earnings by about 11 percent in 2000.
The Securities and Exchange Commission potentially could pursue charges.
The two companies admitted to no wrongdoing, but conceded Monday that their deals with Enron in 2000 no longer would be acceptable.