Three former senior Merrill Lynch bankers were on Wednesday charged with criminal conspiracy stemming from a 1999 deal with bankrupt energy firm Enron. The news was announced by assistant attorney-general Christopher Wray at a Washington press conference.
The arrests bring the number of people charged in the Enron investigation to 23.
The men — Robert Furst, Daniel Bayly and James Brown — were involved in an obscure but now notorious transaction to sell three barges carrying generators off the coast of Nigeria. It is alleged the transaction was a sham, and allowed Enron to book fictitious profits of $12-million, which helped the company meet its fourth-quarter targets that year.
In a separate settlement with the Department of Justice, Merrill Lynch — which has not been charged — said it accepted responsibility for the conduct of its employees and would institute reforms, including monitoring all complex transactions with third parties. It paid $80-million in March to settle civil charges relating to the Nigerian barges.
The men, accompanied by their lawyers, surrendered to the Houston office of the FBI on Wednesday morning. They were charged with falsifying books and records, carrying a maximum sentence of five years. Brown was also charged with obstruction of justice and perjury, and could face an additional 15 years in prison.
Prosecutors alleged that the Nigerian deal was structured to look like an asset sale, when in fact the barges were simply being ”parked” with Merrill Lynch. The indictment claims the bank was lending Enron the money and holding the barges on the understanding it would be paid back with interest in six months.
Charges from the inquiry into Enron’s collapse have been brought against former finance chief Andrew Fastow; his wife and assistant treasurer Lea; seven people in connection with Enron’s broadband business; and two in relation to energy trading in California.
Enron’s audit firm, the now defunct Arthur Andersen, was found guilty of obstruction of justice; three former NatWest bankers have also been charged. Ben Glisan, Enron’s treasurer, became the first of the company’s executives to be jailed last week after pleading guilty to conspiracy. — Guardian Unlimited Â