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Money > Reuters > Report January 2, 2002 1455 IST |
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Enron heads knew of deals to grow earnings: WSJTop Enron Corp officials knew about the financial partnerships that fueled the former energy-trading giant's downfall, and were aware of the possible conflict-of-interest issues surrounding its former chief financial officer's involvement in them, The Wall Street Journal reported on Wednesday. Internal documents indicate that the partnerships were viewed as essential to maintaining Enron's rapid growth rate, the newspaper said in its online edition. The documents also confirm the theory that top officials, including chairman Kenneth Lay and former president Jeffrey Skilling, were very involved with setting up and overseeing the partnerships, it added. No one at Enron was immediately available for comment. The documents include an internal memorandum from an Enron attorney to Skilling regarding the way to monitor transactions with the partnerships, as well as excerpts of minutes from the company's board and board finance committee meetings. The partnerships were run by former chief financial officer, Andrew Fastow, who was ousted in October. He had been instrumental in forming outside partnerships, known as special-purpose entities, associated with Enron that are a focus of an investigation by the US Securities and Exchange Commission. Houston-based Enron is thought to have used the SPEs in transactions designed to take debt off its balance sheet and protect the good credit rating critical to its highly leveraged capital structure, according to lawyers involved in the case. After it was forced to alter this strategy and restate its financial results to consolidate the SPE transactions onto its books, Enron's corporate debt was downgraded and its stock price plummeted. On December 2, the company -- only months before ranked No 7 on the Fortune 500 list of top corporations -- made the largest bankruptcy filing in US history. One document said that the board had chosen Lay and Skilling to help make sure the company got fair consideration in an early partnership deal, the newspaper said. The documents also indicate that the board and top management knew about the possible conflict-of-interest issues related to the CFO running partnerships that ended up doing business with Enron, the paper said. It said Enron has estimated Fastow made more than $30 million from his partnership activities. ALSO READ:
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