In 16,000 pages of financial statements released last week to the bankruptcy court overseeing its case, Enron Corp. reported it now has $9 billion in the black ink column. However, of Enron’s $51.8 billion in listed assets, $35 billion is based on the “book” values dated before Enron filed for bankruptcy Dec. 2, 2001. The numbers used to establish the assets’ current values, including payments due from affiliates that now may be bankrupt, are not “wholly reliable,” Enron said, but to update all of them now would be “unduly burdensome and time consuming.” Nearly 50 Enron subsidiaries, many of them bankrupt, are expected to detail their financials in the next few days.

The latest documents also detail cash and stock payments of nearly $681 million to executives up until the company filed for bankruptcy last December, and these figures are expected to be closely scrutinized by federal investigators examining the company’s alleged fraud and earnings’ manipulation. The Department of Justice’s task force had been bird dogging the prosecution of the company’s auditor, Arthur Andersen LLP. However, with the auditor’s guilty finding by a Houston jury in the bag, investigators can now target their sights on Enron’s alleged financial misconduct.

After 10 days of deliberations, federal jurors in Houston June 15 convicted Andersen, Enron’s auditor for 16 years, of obstructing a government investigation into Enron. The panel of 12 told reporters they doubted Andersen partner David Duncan, who was a key government witness, had committed a crime in overseeing the shredding of documents at Enron. Duncan had already pleaded guilty.

Following the Andersen verdict, Leslie Caldwell, who leads the Justice Department’s investigation into Enron, said the government will pursue the case. “We are going to get to the bottom of the Enron debacle and those people who are responsible are going to be prosecuted,” she said Saturday.

Any new securities fraud charges against Enron executives may allege they covered up the energy company’s financial condition before it declared bankruptcy. Investigators also are expected to target the off-balance sheet transactions that were used to hide millions of debt, and which made their managers wealthy.

In a court filing indicates that up to the date Enron filed for bankruptcy Dec. 2, 2001, it paid nearly $681 million in cash and stock to its 140 senior managers, including at least $67.4 million to former Chairman and Chief Executive Kenneth Lay.

The filing also details $32 billion in payments made to creditors and others in the 90 days before the bankruptcy filing. Two weeks ago, former Enron employees reached an agreement with creditors that allows them to receive up to $13,500 in severance after being laid off in December. However, the former employees’ agreement goes one step further: it will allow them to pursue court action to obtain some of the bonus payments to Enron executives before the bankruptcy.

Under bankruptcy law, creditors may attempt to recover a some of the payments made within 90 days of a bankruptcy filing by claiming that the payments represent “preferences,” or money paid to select parties to the detriment of the creditors. During that 90-day period under certain circumstances, bankruptcy law does not allow the bankrupt company to channel funds to any lenders, creditors, insiders or others in a way that would result in those entities recovering a higher percentage of what is owed them than a company’s other creditors.

If the former Enron employees or other creditors could prevail on their claims that Enron committed fraud and that managers benefited financially from the misinformation, some of the payments would have to be returned to the Enron bankruptcy estate.

On average, the $681 million paid to the 140 executives averages about $4.8 million per person, including $135 million in restricted stock that vested in 2001, and $240 million in salary and bonuses. The compensation includes stock options, deferred compensation and expenses.

The U.S. Bankruptcy Court for the Southern District of New York had extended Enron’s financial statement filing by six months to allow the company to evaluate all of its complex businesses and business transactions. However, experts pointed out that despite the extension — unusual in any case — the information is probably no more specific than if the company had filed under the usual deadlines. The statement also does not detail any of the company’s 3,000-plus third-party transactions and partnerships.

Jeff Boyd, deputy attorney general for Texas, which is also a creditor, said the state was “disappointed that Enron’s schedules and statement of affairs, while voluminous, were not as comprehensive as we expected, especially when they’ve had more than six months to work on them.”

The largest of Enron’s assets are the “accounts receivable,” valued at $34.8 billion. However, as an example, they include more than $1 billion due from Enron Broadband Services, which recently filed for bankruptcy. The unit never turned a profit for Enron, and its assets now are estimated to be worth only $10 million. The filing also includes a value of $3.5 million in accounts receivable for the prepaid naming rights to the Houston Astros ballpark, formerly named Enron Field. However, the company obtained a $2.1 million buyout several months ago to relinquish those rights.

In the 90 days preceding its bankruptcy filing last year, Enron spent almost $3.6 billion to pay several financial institutions, all now named as co-defendants in civil lawsuits. Enron paid $215 million to Credit Suisse First Boston; $155 million to Lehman Brothers; and $12 million to Citibank. An examiner has already been named by the court to study whether the banks’ roles were improper and whether payments to them before the bankruptcy may be seized.

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