Enron Corp. on Wednesday agreed to make three company officers available for deposition by a group of insurance companies and J.P. Morgan Chase & Co. over a series of controversial oil and gas trades, according to lawyers involved in the negotiation.
The officers are Raymond Bowen, Enron’s treasurer; Jordan Mintz, a vice president, and Kelly Boots, the company’s finance director.
They have “firsthand knowledge” about the forward energy sales contracts dating back to 1997 between Enron and Mahonia Ltd., an offshore entity controlled by J.P. Morgan, according to court filings by 11 insurance companies.
Those insurers including Liberty Mutual Insurance Co., Safeco Insurance Co., St. Paul Fire & Marine Insurance Co., and Citigroup Inc.’s Travelers unit — are embroiled in litigation with J.P. Morgan over who should bear the cost of nearly $1 billion in Enron financing that has gone bad following the Houston energy trader’s collapse.
J.P. Morgan has said the insurers should pay because they guaranteed with “surety bonds” the series of failed energy trades between Enron and Mahonia. The insurance companies have refused to pay because they believe the arrangements were really loans disguised as trades.
The insurance companies have alleged that through Mahonia, J.P. Morgan bought gas from Enron, which it then sold back to the energy company at a slightly higher price. The difference, the insurers say, amounted to an effective interest payment from Enron for the bank’s loan.
Mahonia, in addition to being the subject of the surety bonds lawsuit, has also grabbed the attention of both congressional investigators and the Securities and Exchange Commission J.P. Morgan, the second-largest U.S. bank and a leading creditor of Enron, has repeatedly denied any wrongdoing.
Enron had previously refused to make those witnesses available for deposition because such inquiry would further distract the reorganization efforts of the company, which already is facing a number of congressional investigations.
“It’s all about timing,” said Peter Gruenberger, an Enron lawyer, referring to the deposition request.
The trial in the surety bonds case is set to begin in Manhattan federal court in December.