Enron memo could be big problem for Causey:Handwritten note sets out secre

[Judi Lynn]

July 24, 2004, 12:33AM

Enron memo could be big problem for Causey
Handwritten note sets out secret deals he and Fastow made
By MARY FLOOD and TOM FOWLER
Copyright 2004 Houston Chronicle

A handwritten memo detailing secret side deals between ex-Enron Chief Accounting Officer Rick Causey and ex-Chief Financial Officer Andrew Fastow has defense lawyers predicting that Causey is under greater pressure to seek a deal with the government.

The document, which prosecutors have called the "global galactic" agreement, seemed a part of Enron folklore until it was cited as an actual written agreement in the indictment of ex-Chairman Ken Lay earlier this month.

The Chronicle obtained a copy of the memo this week. It is neatly handwritten and appears to be initialed on all three pages by Causey and Fastow. In seven different deals it guaranteed Fastow-controlled LJM entities — which were investment partnerships established to do side deals with Enron — as much as $50 million from Enron. The company promised to buy back assets previously sold to LJM or pay in some other way.
(snip)

The agreement stands out because it blatantly documents promises of profits for the Fastow partnerships. Included in the list are promises related to the Nigerian barge deal, a 1999 arrangement to sell electricity-generating barges off the coast of Nigeria that prosecutors allege was a sham sale, designed to pump up Enron's bottom line and generate bonuses.
(snip/...)

http://www.chron.com/cs/CDA/ssistory.mpl/topstory/2698444
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[snippy]

1. This is similar to the Harken Energy and Aloha Petroleum deal.

From a 2002 article:

Bush and Harken Energy

. . .

Are there other questions about Harken?
Quite apart from Mr Bush's share dealings, the company came under scrutiny for a 1989 deal. In that transaction, Harken sold 80% of a subsidiary, Aloha Petroleum, to a partnership formed by Harken executives, who got most of the money for the deal by borrowing from Harken itself. The transaction allowed Harken to reduce the amount of debt on its balance sheet and to claim the proceeds of the sale as income.

How did that go down with the SEC?
The SEC thought that the income should have been deferred to future years. After months of discussions with the SEC, Harken in January 1991 restated its financial reports to add $9m to its loss column, nearly quadrupling its loss. It is the kind of financial manoeuvre that would be frowned upon now after the Enron scandal.

How does Mr Bush explain the transaction?
In a press conference this week, an irritated Mr Bush said: "There was an honest difference of opinion as to how to account for a complicated transaction. Sometimes the rules aren't as specific as one would expect, and therefore the accountants and the auditors make a decision."

http://www.guardian.co.uk/bush/story/0,7369,752706,00.html

[cliss]

2. Wow. That's awesome.

Remember all the grinding of papers that went on for weeks as Arthur Anderson, Enron and Vinson & Elkins turned deadly documents into confetti?

Looks like they missed one. Good job.

[TahitiNut]

4. Remember, Sen. Kay Bailey-Hutchinson's husband is a partner

... at Vinson & Elkins - where he went after he sold Arlington down the river (as counsel for the municipality) for the Arlington Stadium 'deal' that enriched El Smirko.

[lostnfound]

3. kick. Blatant fraud, well-documented. Good news for prosecution.

Ironic that it was hand-written. Must not have wanted to trust the secretaries to type it and/or computers which leave too many footprints behind.

[hang a left]

5. Funny how this document got leaked.

It implicates Fastow and Causey, but no mention of Lay. Isn't Lay trying to pin everything on Fastow?

[schultzee]

6. Daddy **** PIG send Lay a note wishing him success in getting out

of his delimma. The ****es are rooting for Mr. Lay. Just part of the family hobby, stealing.