Former Enron Corp. CFO Andrew S. Fastow may soon be headed to prison and doesn't want to be the scapegoat for those banks that he says helped the company disguise its financial problems, namely Merrill Lynch & Co. Inc. (MER), Credit Suisse Group (CS) and the Royal Bank of Scotland Group PLC.
Fastow has agreed to assist lawyers representing shareholders who lost billions of dollars when the energy trader filed for Chapter 11 bankruptcy in December 2001. He is pointing towards the several investment banks that have to date rebuffed efforts to settle a class-action shareholder lawsuit. The three mentioned above all deny wrongdoing.
Shareholders' lawyers have successfully collected a record $8 billion in settlement agreements with J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C), and Bank of America Corp. (BAC), among others. Barclays plc (BCS) escaped responsibility when a judge dismissed them from the case. The legal reasoning used, which other banks hope to use in their fight against the lawsuit, is that shareholders must do more than just prove that bankers aided or abetted Enron but instead were directly involved in Enron's manipulations or by misleading investors-considered a much higher burden of proof.
This is where lawyers for the shareholders hope that Fastow, who often dealt with bankers in his position as Enron's finance chief, can be of assistance. He has stated previously that certain banks worked with Enron "intentionally and knowingly", as quoted in this WashingtonPost.com article, to engineer deals that would affect the company's financial statements and achieve technical accounting goals of questionable substance. His statements will be presented at his sentencing.
Know More about questionable business practices at ItsBadBusiness.com.
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