JP Morgan Chase and Citigroup were accused yesterday of being active participants in helping Enron, the bankrupt US energy firm, to deceive investors by hiding debts, inflating profits and evading taxes.
In Washington congressional hearings, the Wall Street banks were again given a grilling by senators who said they designed ”sham” transactions to support Enron’s creative accounting.
”You aren’t the victims of Enron, you folks helped perpetrate these deceptions,” said Carl Levin, chairperson of the Senate governmental affairs permanent subcommittee on investigations.
Both banks maintained that they had done nothing wrong but admitted they would not enter into similar deals in today’s less forgiving climate.
”Even assuming that these transactions were entered into in good faith and were entirely lawful, they do not reflect our standards and they would not happen now at Citigroup,” said Charles Prince, the chief executive of the firm’s global corporate and investment bank.
JP Morgan admitted to designing a controversial deal called Slapshot, in which Enron hid a $375-million loan inside a fake $1,4-billion loan from the bank, one billion of which it repaid instantly.
The panel offered a raft of internal documents and e-mails from both banks.
”Sounds like we made a lot of exceptions to our standard policies,” one senior Citigroup executive wrote in a December 2000 memo. – Guardian Unlimited (c) Guardian Newspapers Limited 2001