Although off-the-book partnerships are “very commonplace” among U.S. corporations, a leading securities analyst said that what Enron Corp. did “was mutate [them] into something that was unrecognizable.”

John Olson, an analyst with Sanders, Morris and Sanders in Houston, told a House Energy and Commerce subcommittee last week that the public was on the verge of finding out about some of the partnerships that have been formed by other corporations. He said he didn’t believe that any of Enron’s competitors in the energy industry exploited the partnership structure to the degree that Enron did.

Enron’s questionable off-the-book partnerships were set up primarily to hide debt and enrich top-level executives, such as ex-CFO Andrew Fastow and Michael Kopper, former managing director of Enron Global Finance. The two men reportedly pocketed a combined $40 million as a result of their roles in the partnerships, which led to Enron’s collapse and slide into bankruptcy in early December.

Olson, one of the few analysts who didn’t tout Enron stock, said the company’s partnerships didn’t “pass the smell test.”

In the wake of the scandal, he called for Congress to beef up the Securities and Exchange Commission’s (SEC) oversight of corporations, which he said currently is “borderline,” as well as strengthen existing accounting standards, which he noted are “as flaky as can be.”

The Enron scandal and bankruptcy has caused “tremendous collateral damage” to the energy industry, Olson said, and it is “still going on.”

Enron “was good at some things, but it was great at gaming the system,” he noted. Financial analysts “never saw or were never aware” of the extent of Enron’s use of the off-the-book partnerships, Olson said, adding that he thought the company had only five or so partnerships prior to last fall. It turned out Enron had around 4,000 partnership transactions.

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