Enron and Citigroup

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Impeach George Bush

Enron and Citigroup

Source: TheTip, 2002-09-17

Candidate: Enron

A class action lawsuit has been filed against Citigroup alleging that the investment bank and its senior executives misled shareholders about a 1999 transaction with collapsed US energy trader Enron.

The action, filed in New York, adds to the growing list of actions arising from Wall Street scandals. Disgruntled investors have prompted a feeding frenzy among lawyers, who sense that public opinion has shifted against once high-flying investment banks.

The suit refers to a transaction structured as a commodity trade that it claims was a disguised loan devised to keep $125m (�80m) of debt off Enron's balance sheet; it names chairman and chief executive Sandford Weill and chief financial officer Todd Thomson.

Last month, congressional investigators grilled Citigroup and another leading Wall Street bank, JP Morgan Chase, about their relationships with Enron. They alleged that both had helped Enron to conceal its debts through complicated commodity trades.

Shares in both firms have been hammered by the Washington hearings, which JP Morgan described as a "highly politicised media event". Both banks have counter-attacked, arguing that what they did was consistent with years of industry practice and had been vetted by lawyers and auditors.

The suit, filed by lawyers Schiffrin & Barroway, also accuses Citigroup of "misrepresenting Citigroup's potential Enron-related exposure in its 2001 annual report and elsewhere". The law firm last year tried to sue former star internet analyst Mary Meeker, but had the case thrown out of court.

In a letter to Citigroup's 270,000 employees, Mr Weill apologised for the pain caused by the bank's relationship with Enron - although he again insisted that nothing improper had been done.

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