Enron accountant pleads guilty to fraud

The former chief accountant at Enron, Richard Causey, has pleaded guilty to criminal charges related to the financial meltdown of the energy company.

Causey’s deal with prosecutors could have a major impact on the case against his co-defendants, former chairman Kenneth Lay and former president Jeffrey Skilling.

The trial, originally scheduled to begin on January 17, has been postponed until January 30 in order to allow defence lawyers to better prepare their case.

Causey had been charged with more than 30 criminal counts but reached a deal with prosecutors to plead guilty to just one count of securities fraud.

He will now serve no more than seven years in jail.

If prosecutors are satisfied with his level of cooperation they said they would ask the judge to reduce that sentence to five years in jail.

"This is bad news any way you shake it for the defence," David Berg, a Houston-based civil and white collar trial lawyer.

Further charges

Lay and Skilling face fraud, conspiracy and other charges in relation to the alleged financial and accounting misdeeds at the company.

Enron’s collapse into bankruptcy in 2001 rocked financial markets and undermined investor confidence corporate governance.

"It’s a very good development for the Government because it not only provides them with key insider testimony but provides them with the possibility of significantly shortening the trial," Robert Mintz, a former federal prosecutor, said.

"They can begin one step closer to the top of the corporate structure and avoid the potential pitfall of losing their case in a series of mind numbing technicalities."

Mr Mintz says the fact that prosecutors are willing to offer such a generous deal just weeks before the trial is scheduled to begin indicates they may have been uneasy about the strength of their case.

He says while the testimony of former chief financial officer Andrew Fastow, who pleaded guilty to conspiracy and securities fraud last year, will be crucial, Causey will serve as a better witness for the prosecution.

"Fastow brings the negative baggage of having lined his own pockets with these off-book partnerships and has largely been credited with being the architect of these schemes to defraud investors," he said.

"Causey doesn’t present the same bulls eye for the defence."

Bankruptcy

Over 4,000 Enron employees lost their jobs when the giant energy company declared bankruptcy in 2001.

Many employees also lost their life savings that had been invested in Enron stock.

The company’s spectacular fall came after the US Securities and Exchange Commission began investigating Enron’s accounting practices.

That investigation found Enron had used questionable and complex partnerships to hide a billion dollars in debt and losses.

To date, 34 defendants have been charged, including 25 former Enron executives.

With Causey’s plea, 17 defendants have now been convicted.

- AFP