An investigative committee of Enron's board has released its report on the breakdown of controls and ethics in the company.
Our investigation identified significant problems beyond those Enron
has already disclosed. Enron employees involved in the partnerships
were enriched, in the aggregate, by tens of millions of dollars they
should never have received -- Fastow by at least $30 million, Kopper
by at least $10 million, two others by $1 million each, and still two
more by amounts we believe were at least in the hundreds of thousands
of dollars. We have seen no evidence that any of these employees,
except Fastow, obtained the permission required by Enron's Code of
Conduct of Business Affairs to own interests in the partnerships.
Moreover, the extent of Fastow's ownership and financial windfall was
inconsistent with his representations to Enron's Board of Directors.
This personal enrichment of Enron employees, however, was merely one aspect of a deeper and more serious problem. These partnerships -- Chewco, LJM1, and LJM2 -- were used by Enron Management to enter into transactions that it could not, or would not, do with unrelated commercial entities. Many of the most significant transactions apparently were designed to accomplish favorable financial statement results, not to achieve bona fide economic objectives or to transfer risk. Some transactions were designed so that, had they followed applicable accounting rules, Enron could have kept assets and liabilities (especially debt) off of its balance sheet; but the transactions did not follow those rules.
The report is a 9 meg PDF. Here are some summaries:
- Enron Panel Finds Inflated Profits and Few Controls
- Panel Finds Rush to Hide Losses and Enrich a Few
- Top Executives Blamed in Enron's Fall
- Report Highlights
- How executives made millions in hidden deals