Robert Rubin, the chairman of Citigroup, has been cleared of any wrongdoing in urging a senior US treasury official to intervene on behalf of Enron as the energy group spiralled toward bankruptcy.
Rubin, who resigned as treasury secretary in July 1999 before joining the board of the Wall Street bank, sparked a political furore after it emerged that he had called Peter Fisher, the under secretary of the treasury on November 8 2001.
According to a report issued by US Senate investigators, he made the call after learning that Enron’s credit rating was about to be downgraded by Moody’s Investors Service, jeopardising a planned merger with rival Dynegy and $1-billion loan the bank had made to the energy firm.
Rubin, who remains a leading Democrat, asked Fisher to lean on the credit rating agencies and get them to delay publishing their downgrades. Fisher refused, the merger fell apart and Enron filed for bankruptcy in December of that year.
Rubin and William Harrison, the chief executive of JP Morgan Chase, which was also advising on the merger, both made calls to Moody’s as well asking for the downgrade to be forestalled.
Republicans, whose own connections to Enron were under scrutiny at the time, made capital of Rubin’s attempt to prevent the energy firm’s failure.
But the report issued yesterday by the Senate governmental affairs committee said: ”It does not appear that Rubin violated any laws or regulations in contacting Fisher and proposing that the treasury department contact a credit rating agency in connection with Enron’s rating.”
Interviewed by Senate staff, Rubin said the phone call to Fisher was ”not only proper but I would do it again”.
Citigroup is struggling to restore its reputation after the financial scandals of last year. A separate congressional committee investigating Wall Street’s links to Enron on Thursday called on financial regulators to examine a string of deals. – Guardian Unlimited Â