UK bankers face Enron-related charges

 

The US Department of Justice has charged three former British bankers with wire fraud in a $7.3 million scheme involving the collapsed energy trader Enron.

They were the first charges filed by the government in its Enron probe since its successful prosecution of Enron auditing firm Arthur Andersen this month on charges brought in March of obstructing the government's investigation.

The three bankers were each charged with one count of wire fraud, based on a scheme to defraud their employer, Greenwich NatWest, which was bought by Royal Bank of Scotland two years ago. The charges were filed in US District Court in Houston.

Justice Department officials said all three men were believed to be currently in Britain.

"As these charges demonstrate our investigation into the collapse of Enron Corp is active and ongoing," Deputy Attorney General Mr Larry Thompson said in a statement.

The complaint, filed by the Justice Department's Enron Task Force, charges that through a series of financial transactions, the defendants had secretly invested in an Enron special purpose entity, Southampton LP, and were able to siphon off $7.3 million that should have gone to NatWest.

The men recommended that an interest in an Enron-related partnership held by NatWest should be sold for $1 million, the Justice Department alleged.

At the same time, the defendants were scheming with Enron executives to purchase a portion of that interest for themselves for only $250,000 and then liquidated it only weeks later for more than $7.3 million, according to the complaint.

The charges against the three bankers could be a boon to the government's Enron case, said one former government prosecutor. The bankers might provide damaging testimony against high-level officials in exchange for leniency.