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Enron Mail |
Enron Executives Sent Requests for Details of Affiliate Profits
2001-10-26 15:36 (New York) Enron Executives Sent Requests for Details of Affiliate Profits Houston, Oct. 26 (Bloomberg) -- Lawyers for a shareholder suing Enron Corp. are asking executives of the largest energy trader to disclose any income they made from their involvement with affiliated companies that bought and sold Enron assets. Lawyers have made the requests to President Greg Whalley, Vice Chairman Mark Frevert and Chief Financial Officer Jeff McMahon and 83 other employees arrived at Enron's Houston offices this week, said Paul Paradis, a partner in the New York law firm Abbey Gardy. Requests also were sent to 17 Enron partnerships such as Whitewing Management and Marlin Water. Paradis represents Fred Greenberg, an Enron shareholder who is suing the company's board for allowing former Chief Financial Officer Andrew Fastow to run partnerships that cost the company at least $35 million in cash and $1.2 billion in lost shareholder equity. The requests are aimed at determining if Enron executives benefited financially from roles as officers and directors of partnerships that bought and sold company assets. Enron formed at least 18 such affiliated companies, listing executives and employees as officers and directors of the partnerships, according to Texas secretary of state records. Under Texas law, failure to respond to the document requests will result in subpoenas being issued. Subpoenas could go out next week if responses don't arrive by then, Paradis said. Enron spokeswoman Karen Denne didn't respond to requests for comment about the document requests. The executives earned no income from the partnerships, Enron spokesman Mark Palmer has said. ``There are no financial interests in the structures themselves for any Enron employee,'' Palmer said. He said it's common for a company to name its executives to the boards of affiliates. Affiliates Have Debts Texas records show Chief Executive Officer Kenneth Lay, Frevert, Whalley, McMahon and dozens of other people who list their address as Enron's corporate headquarters serving as officers and directors of limited liability companies and foreign business corporations. The document requests ask Enron executives for information on any form of compensation or benefit received from any of the affiliates, including stock grants and options. They also ask the executives to disclose any equity or partnership interests in the affiliates. Enron formed many of the affiliates to buy company assets such as power plants and natural-gas pipelines. That allowed Enron to move debt associated with those projects off its books. The affiliates bought the assets with borrowed money. They plan to repay the debt by eventually selling the assets. Enron might be liable for any shortfall between the sales proceeds and the debt. That could amount to at least $3.3 billion if the assets don't generate any money, a remote possibility, the company has said. Few Answers Investors and analysts pressed Enron Chief Executive Officer Kenneth Lay for details on the finances of the partnerships in a conference call Tuesday. Today, Enron spokeswoman Karen Denne didn't respond to questions about one of them, ES Power 3 LLC. Texas records list 78 Enron executives and employees as officers, directors and managers of ES Power 3 LLC. The entire Enron board is also listed. Shares of Enron $1.15 to $15.20 in late trading. --Russell Hubbard in the Princeton newsroom at 609-750-4651, or at
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