STOCK QUOTES     More market data...

Enron CFO's top aide testifies on barge deal

By KRISTEN HAYS
The Associated Press

E-mail this article Print this article Search archive Most read articles Most e-mailed articles

HOUSTON — As Enron scrambled to unload interest in several barges in December 1999, former finance chief Andrew Fastow contemplated coming to the rescue with a buyer he created so he would be a hero to then-president Jeffrey Skilling, Fastow's former top aide testified yesterday.

The aide, Michael Kopper, said during the first criminal trial to emerge from Enron's December 2001 crash that he considered it a risky deal for Fastow's LJM2 partnership to buy into, even though Fastow said it would help Enron and "he would look like a hero to Jeff Skilling."

But then-treasurer Jeff McMahon was enlisting Merrill Lynch, the world's largest securities firm, to buy the interest in the barges and allow Enron to book a $12 million pretax profit at the end of 1999 — and the brokerage came through.

The government contends in the conspiracy and fraud trial of four former Merrill executives and two former midlevel Enron executives that the sale was a sham because Fastow had promised that Enron would find another buyer or buy out Merrill's interest itself within six months.

The defendants contend that the energy company was never obligated to buy back the barge equity.

Skilling, who has pleaded not guilty to conspiracy and fraud charges in a separate case, was Fastow's boss at the time of the barge deal.

And LJM's time would come, Kopper said.

In June 2000, Fastow called Kopper — who was a managing director both for LJM and Enron — and "kind of giggled" about LJM buying Merrill's interest in the barges.

Kopper said Fastow told him McMahon had promised Merrill that Enron would ensure the brokerage's barge interest would be bought out in six months, and Enron needed to follow through to maintain stature in the marketplace as a company that kept its word.
 
LJM2 stepped up, but Kopper said the partnership got a promise of its own to be bought out by January 2001.

He said Fastow secured an agreement that Enron would buy LJM's interest if another buyer wasn't found.

LJM bought Merrill's interest, and later in 2000 AES Corp. bought the barges from Enron.

Kopper, 39, became the first former Enron executive to plead guilty to crimes more than two years ago.

His testimony yesterday marked his debut on a witness stand.

Kopper pleaded guilty to two counts of conspiracy for his role at the center of myriad financial schemes orchestrated by Fastow, who himself pleaded guilty to two counts of conspiracy in January this year.

Those schemes enriched both men with millions of dollars skimmed from Enron and eventually fueled the energy company's failure.

Kopper said yesterday he turned over $12 million to the government — nearly $4 million of which was eventually given to LJM2.

He said after buying a $380,000 Houston home in Fastow's neighborhood he'll move into this year, he has about $100,000 in cash and a 401(k) retirement account worth $300,000.

Thousands of Enron workers watched their 401(k) accounts, packed with Enron stock, evaporate when the company imploded and its shares became worthless.