WASHINGTON, 22 August — Criminal prosecutors yesterday scored their biggest victory yet in the Enron investigation, as a central figure in the off-balance sheet transactions that led to the US energy trading company’s downfall pleaded guilty to two charges of money laundering and fraud.
Under a deal reached with Washington, Michael Kopper, the former head of Enron Global Finance and right-hand man of Andrew Fastow, Enron’s former chief financial officer, will cooperate fully with federal investigators.
The charges against him carry a maximum sentence of 15 years and a fine of $500,000.
But the severity of his final punishment will depend on the extent to which he enables prosecutors to catch even bigger fish — such as Fastow, the former Chief Executive Jeffrey Skilling and Kenneth Lay, Enron’s former chairman and a major financial backer of President George W. Bush. But Lay’s lawyers yesterday denied he knew Kopper.
Yesterday, at a brief court hearing in Enron’s home city of Houston, Kopper was released on $5 million bail, after agreeing to surrender $12 million he admitted having illegally extracted from Enron. His conviction would be the first of a senior Enron executive in the eight-month inquiry since the company folded in December, and could be a watershed in the case. Their submission yesterday listed three specific illegal transactions acknowledged by Kopper, 37, relating to off-balance sheet partnerships called Radar, Chewco and Southampton.
In the case of Southampton, the government has already accused Kopper and Fastow of defrauding National Westminster Bank of $7.3 million. Three Britons, former NatWest bankers, were charged of participating in the fraud in June.
According to an independent report on the debacle published in February, Fastow made some $30 million out of partnership transactions at Enron’s expense and Kopper at least $12 million, without informing the company. In Chewco and Radar, the two gave lucrative investment opportunities to friends that by law should have been offered to independent parties.
Fastow, who refused to testify in congressional hearings earlier this year, was dismissed by Enron in October, a week after it revealed a $618 million third-quarter 2001 loss, and a $1.2 billion writedown in shareholder equity, as years of hidden debt and inflated profits could be kept secret no longer.
Kopper left Enron several months before the collapse to run two other Fastow-created partnerships, LMJ and LMJ2, whose prime function — like Chewco — was to keep Enron debts off its main balance sheet. (The Independent)
