- America's biggest banks are accused of
luring investors into Enron in the months before its demise while scurrying
behind the scenes to prop up a business they knew was in serious trouble.
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- In the first sign that Wall Street may
turn on itself in the hunt for the villains of the Enron debacle, Citigroup,
Goldman Sachs and Bank of America are named in a lawsuit filed in a New
York court.
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- Silverstein Management, an investment
house, claims the banks knew Enron was poised to collapse when they made
sales pitches for the company's bonds and shares.
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- The lawsuit goes to the heart of the
conflicts of interest that critics say the top banks have in relation to
many of America's leading corporations, serving as lenders, corporate advisers
and promoters of shares to the public.
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- The suit alleges that Enron's bankers
"sold the securities which propped up the pyramid", earning hundreds
of millions of dollars in fees in the process.
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- Schroder Salomon Smith Barney, Citigroup's
broking arm, issued several positive notes on the company, including one
on October 19 that reiterated its "buy" recommendation. The note
came days before Enron drew $3 billion (£2 billion) in emergency
credit, partly arranged by Citigroup.
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- Earlier this month Citigroup said it
had $650m in unsecured loans to Enron. JP Morgan has <LINK> an Enron exposure estimated at $2 billion. Citigroup
declined to comment on the suit.
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- Other developments yesterday saw Unilever
chief executive Niall Fitzgerald increase the pressure on the accountancy
industry to reform itself in a speech to the World Economic Forum in New
York.
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- Mr Fitzgerald is reviewing whether it
is "appropriate" for Unilever to employ the same accountants
as both auditors and consultants. Last year Unilever paid PricewaterhouseCoopers
£22m for auditing work and £67m in consultancy fees.
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- PwC <:LINK>
is spinning off its consulting
arm in a bid to restore investor confidence, following allegations that
the profession is deeply compromised.
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- President Bush is calling for new laws
to ban executives from offloading shares in periods when ordinary staff
are not allowed to sell.
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- According to lawsuits, Enron insiders
sold $1 billion worth of stock in the run-up to the collapse, while blocking
other employees from doing the same.
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