Five executives convicted of fraud in Enron-Merrill trial

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The Independent Online

A US jury convicted four former executives from the Wall Street bank Merrill Lynch and a former Enron finance executive of conspiracy and fraud yesterday for helping push through a sham deal to pad the energy company's earnings.

A US jury convicted four former executives from the Wall Street bank Merrill Lynch and a former Enron finance executive of conspiracy and fraud yesterday for helping push through a sham deal to pad the energy company's earnings.

The deal involved a bogus sale of interest in power plants mounted on barges off the Nigerian coast to the brokerage at the end of 1999, so the company could appear to have met earnings targets.

A sixth defendant, a former in-house Enron accountant, was acquitted. Sheila Kahanek testified that she consistently opposed a verbal promise that the government said had made the deal a loan - that Enron would resell or buy back Merrill's interest within six months.

Those convicted of conspiracy and two counts of wire fraud were: Daniel Bayly, Merrill's former head of investment banking; James Brown, the former head of Merrill's asset lease and finance group; William Fuhs, a vice president who reported to Brown; Robert Furst, a former manager of Merrill's relationship with Enron; and Dan Boyle, a former Enron finance executive. Sentencing takes place next March and each faces up to 15 years in prison.

The barge deal is not among the numerous alleged financial machinations that pushed the one-time Wall Street darling Enron into bankruptcy in December 2001, as a web of accounting manoeuvres to prop up its books unravelled. But the US government contends the barge deal was an example of many illegal accounting schemes that Enron used to pump up its appearance of financial success.

Merrill avoided prosecution last year by acknowledging that some employees may have broken the law, co-operating with investigators and implementing reforms to prohibit dubious year-end deals. In March 2003, Merrill paid Wall Street regulators $80m (£44m) to settle civil allegations that involved the barge deal without admitting or denying wrongdoing.

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