One of bankrupt Enron Corp.’s federal examiners criticized Bank of America Corp., Royal Bank of Canada, KPMG LLP and PricewaterhouseCoopers LLP in yet another report on the corrupt company.

Harrison Goldin, a federal examiner appointed by the U.S. Bankruptcy Court for the Southern District of New York, filed his report on Thursday. Among other things, Goldin’s report disclosed that an internal email by an official with the Royal Bank of Canada in September 2000 indicates suspicions that Enron was misstating its assets and hiding debt. The email would have been written more than a year before Enron’s third quarter 2001 earnings report triggered the company’s eventual bankruptcy and endless investigations.

Goldin’s report was the latest of several that have followed the bankruptcy, including the fourth and final report issued in November by the court-appointed auditor Neal Batson (see Daily GPI, Nov. 25). Batson’s report concluded that even if they are not legally culpable, former Chairman Kenneth Lay and former CEO Jeffrey Skilling were part of the “circle of responsibility for the company’s financial demise.”

Goldin examined 10 transactions involving Bank of America and Enron, and did not criticize nine of them. However, in one transaction, which involved a natural gas deal, he said there was enough evidence to conclude that the bank was involved in “aiding and abetting certain Enron officers in breaching their fiduciary duties.”

In a Royal Bank of Canada review, Goldin found some alleged problems among about 15 transactions that he examined. He said in some cases, there was evidence that Royal Bank of Canada “had actual knowledge of wrongful conduct” by Enron officers. Goldin also quoted a September 2000 internal e-mail that said that information received by the bank suggested that Enron’s asset base “is spurious and that there are other obligations hidden” in various company-related entities.

Up to now, most of the accounting issue problems have been directed at deals between Enron and its longtime outside auditor Arthur Anderson LLP. However, Goldin’s report condemns work done for Enron by PricewaterhouseCoopers (PwC) and KPMG also.

“PwC committed professional malpractice and was grossly negligent in preparing and providing” two fairness opinions to Enron’s board of directors in 1999 and 2000, Goldin wrote. The opinion letters covered transactions between Enron and some partnerships controlled by its former CFO Andrew Fastow.

PwC responded that the new report’s criticisms had no merit. “We were engaged only to perform valuation work based on unaudited assumptions provided by Enron management. Any claim against PwC would be frivolous partly because the evidence clearly shows that the board approved the transactions either before PwC performed its work or without knowledge of our work.”

The report also cited evidence that KPMG aided and abetted fiduciary breaches by Fastow and other Enron officers. KPMG “provided substantial assistance” to the former CFO by issuing unqualified audit-opinion letters on Enron’s LJM partnerships, Goldin said. “A fact-finder could find further that KPMG provided substantial assistance to Fastow in his breaches of his fiduciary duty and that Enron suffered reasonably foreseeable damages as a result of those breaches.” As a result, Enron has potential claims against KPMG for negligence, Goldin said.

In a written statement, KPMG said the examiner’s “assertion that KPMG aided and abetted Mr. Fastow in his breach of duty to Enron is utterly baseless and irresponsible.” KPMG was the auditor for Enron’s LJM partnerships, investment vehicles that Fastow named after his wife and two children.

In related news, Batson last week asked the bankruptcy court for permission to end his association with the Enron case. In return, U.S. Bankruptcy Judge Arthur Gonzalez agreed to allow Batson to return to his regular practice by the end of the year. However, Gonzalez deferred for two weeks arguments and a decision on other provisions Batson is seeking.

Gonzalez also approved procedures on Thursday to allow Enron to auction Portland General Electric (PGE), its Oregon utility. A $1.25 billion cash offer by a new company backed by investment firm Texas Pacific Group is the bid to beat, Gonzalez ruled. Competing bidders would have to pay at least $50 million more than the new company, Oregon Electric Utility Co., which also offered to assume $1.1 billion of PGE’s debt.

Gonzalez approved procedures for a Feb. 2, 2004 auction of PGE, with a hearing following the auction to approve the sale to the high bidder.

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