NGI Archives | NGI All News Access
SEC’s Newest Enron Informer Expected to be Valuable Source
Another former Enron Corp. official, who had overseen finances for its vast Enron North America operations, has agreed to cooperate with federal officials — and he is expected to be a valuable addition to the prosecution’s case against the bankrupt trader.
The Securities and Exchange Commission (SEC) reached a settlement Thursday with Wesley H. Colwell, the former chief accounting officer for Enron North America on charges that he and other Enron executives allegedly inflated earnings through the “misuse of reserve accounts, concealment of losses, inflation of asset values and deliberate use of improper account treatment for transactions.”
Colwell agreed to pay $500,000 in penalties, and the SEC said he would cooperate with continuing civil and criminal investigations. Colwell did not admit or deny wrongdoing.
Colwell joined Enron in 1999 after working for its outside auditor, Arthur Andersen LLP, and he is expected to be a valuable addition because the allegations against him involve huge sums of money, which were large enough that they should have come to the attention of upper management, investigators said.
The complaint alleges that in one particular operation “Enron’s senior management directed Colwell and others to fraudulently increase the recorded value” by $100 million. Investigators also allege that Colwell and unnamed “others” engaged in improper accounting tactics to avoid recording $1.4 billion in losses on some of Enron’s pipeline assets “because there was a mandate from Enron’s senior management to not take a loss.”
To “smooth the volatility” of earnings from Enron North America, the SEC complaint charges that the company “manipulated” reserve accounts. For instance, in the last six months of 2000, the SEC said Enron made huge trading profits from California’s deregulated power market, then hid nearly $400 million of profit in a reserve account known as “Schedule C.” The SEC also alleges that Enron improperly released more than $200 million from Schedule C to improve the company’s reported results.
In other news, the Wall Street Journal reported that the Department of Justice is considering filing criminal charges against “a number of former top company executives,” including former Enron President Jeffrey McMahon. According to Journal sources, the government is looking at McMahon “at least in part because of his role in the 1999 sale of some Enron electricity-producing barges off the coast of Nigeria.” Several other former executives already have been indicted in connection with the Nigerian transaction.
The Journal reported that investigators also are looking at former Chairman Kenneth Lay, former CEO Jeffrey Skilling and former Chief Accounting Officer Richard Causey. The Colwell case, said a Journal source, could be a particular worry for Mr. Causey…” and the SEC allegations appear to be “very much intended for Causey.”
©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.
© 2024 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |