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Enron finance chief's wife withdraws plea deal

The US government's case against the failed energy giant Enron was once more mired in confusion last night after the wife of the company's former finance chief, Andrew Fastow, withdrew a plea agreement she had previously reached with prosecutors in Texas.

Lea Fastow backed out of her plea agreement after the judge in the case balked at the amount of prison time her lawyers had negotiated with prosecutors. Her decision cast doubt on a separate plea deal subsequently reached by her husband, under which he is supposed to co-operate with the investigators.

District Judge David Hittner indicated that the agreed sentence of 5 months in prison for Mrs Fastow in addition to another five months confined in her home was insufficient. He would consider giving her between 15 and 21 months behind bars instead. Her trial is now set for July. "Based upon my consideration and full reading of the pre-sentencing report, the court declines to voluntarily limit its role in the sentencing process," Judge Hittner said, in rejecting the sentence.

The judge's action threatens to disrupt the strategy of prosecutors, who saw the plea deal with Mrs Fastow as the means to secure the deal with her husband. Under that agreement, he would serve 10 years in jail after pleading guilty to two counts of conspiracy and admitting orchestrating schemes to make Enron appear financially healthy while enriching himself.

Prosecutors have conceded that, by agreeing to her own deal in January this year, Mrs Fastow played an "integral role" in persuading her husband to do the same. The couple was anxious to obtain sentencing arrangements that would allow one of them to be out of prison at all times to look after their two young children.

There was no word last night on what impact Ms Fastow's decision was likely to have on her husband's dealing with the prosecutors. It was fully expected that his co-operation with the government would lead to criminal charges being filed against other top executives at the company.