The Telegraph
Since 1st March, 1999
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Enron deal with Merrill under probe

Houston, Sept.12: Federal investigators are looking into a 1999 energy deal between the Enron Corp. and Merrill Lynch & Co. to determine whether it was a sham transaction intended to help Enron increase its year-end profit, people who have been interviewed by the government said.

Investigators from the FBI and the Securities and Exchange Commission recently questioned several former Enron executives about the deal, which was completed at the end of 1999 and resulted in a $ 60-million profit for Enron. The investigators have also contacted officials at Merrill Lynch.

The federal investigators want to know whether the last-minute deal helped Enron meet internal performance goals that resulted in huge bonus payments to high-ranking Enron executives. The focus of the investigation is still unclear. But this is just the latest federal inquiry into Enron and the role that Wall Street investment banks played in the companyís collapse.

In recent months, the Justice Department, the SEC and several Congressional committees have been looking into whether some of the nationís biggest commercial and investment banks helped Enron manipulate its earnings statements and its balance sheet to keep the companyís stock price high. Indeed, a Senate panel held hearings in July into Merrillís dealings with Enron. Lawmakers then criticised Merrill for helping Enron doctor its books and for repeatedly compromising its business practices to win business from Enron.

A spokesman for Merrill Lynch, one of the nationís largest brokerage firms, said on Wednesday the firmís dealings with Enron in recent years were entirely appropriate. The company also said that as a matter of policy, it did not comment on continuing investigations.

But in a filing last month with SEC, Merrill said the Justice Department and other federal agencies had requested information about its business dealings with Enron. Merrill also said the Department had recently told the company that it was not a subject of an investigation.

Spokesmen at the Department and the SEC declined to comment on any investigation into the 1999 power deal between Enron and Merrill.

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