A former Enron Corp. accountant and a former Merrill Lynch & Co. vice president on Wednesday became the latest individuals to face criminal charges in connection with a sham sale in 1999 of some Nigerian power generation barges.

Former Enron accountant Sheila K. Kahanek and former Merrill vice president William R. Fuhs pleaded not guilty after being charged in Houston federal court. The superseding indictment charges Kahanek and Fuhs with conspiracy to commit wire fraud and falsify Enron’s books and records. Fuhs faces additional charges of lying to the FBI about a buyback agreement and obstruction of the Enron grand jury. Kahanek and Fuhs pleaded not guilty.

In 1999, federal investigators allege that employees from both Enron and Merrill agreed to “park” two Nigerian power plant barges on Merrill’s books. Enron then reported $12 million in false earnings and $28 million in cash flow in the fourth quarter of 1999. Investigators said the earnings were bogus because Enron executives, including indicted CFO Andrew Fastow, had secretly promised the investment firm that it would buy back the barges with interest. Allegedly, Merrill never took on the ownership risk.

Apparently, Kahanek even reprimanded an Enron colleague for writing up the oral transaction, and Department of Justice investigators said she ordered the employee to destroy all evidence of the agreement in early 2001.

Seven individuals from both Enron and Merrill have been indicted on charges related to the Nigerian transaction. In September, three former Merrill executives were charged for participating, and last month former Enron executive Ben Glisan Jr. pleaded guilty to criminal conspiracy (see Daily GPI, Sept. 18; Sept. 11). Merrill also agreed earlier this year to pay a $80 million fine to settle a Securities and Exchange Commission investigation into the transaction (see Daily GPI, Feb. 24).

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