Enron Executives Sent Requests for Details of Affiliate Profits
2001-10-26 15:36 (New York)

Enron Executives Sent Requests for Details of Affiliate Profits

     Houston, Oct. 26 (Bloomberg) -- Lawyers for a shareholder
suing Enron Corp. are asking executives of the largest energy
trader to disclose any income they made from their involvement
with affiliated companies that bought and sold Enron assets.

     Lawyers have made the requests to President Greg Whalley,
Vice Chairman Mark Frevert and Chief Financial Officer Jeff
McMahon and 83 other employees arrived at Enron's Houston offices
this week, said Paul Paradis, a partner in the New York law firm
Abbey Gardy. Requests also were sent to 17 Enron partnerships such
as Whitewing Management and Marlin Water.

     Paradis represents Fred Greenberg, an Enron shareholder who
is suing the company's board for allowing former Chief Financial
Officer Andrew Fastow to run partnerships that cost the company at
least $35 million in cash and $1.2 billion in lost shareholder
equity.

     The requests are aimed at determining if Enron executives
benefited financially from roles as officers and directors of
partnerships that bought and sold company assets. Enron formed at
least 18 such affiliated companies, listing executives and
employees as officers and directors of the partnerships, according
to Texas secretary of state records.

     Under Texas law, failure to respond to the document requests
will result in subpoenas being issued. Subpoenas could go out next
week if responses don't arrive by then, Paradis said. Enron
spokeswoman Karen Denne didn't respond to requests for comment
about the document requests.

     The executives earned no income from the partnerships, Enron
spokesman Mark Palmer has said. ``There are no financial interests
in the structures themselves for any Enron employee,'' Palmer
said. He said it's common for a company to name its executives to
the boards of affiliates.

                       Affiliates Have Debts

     Texas records show Chief Executive Officer Kenneth Lay,
Frevert, Whalley, McMahon and dozens of other people who list
their address as Enron's corporate headquarters serving as
officers and directors of limited liability companies and foreign
business corporations.

     The document requests ask Enron executives for information on
any form of compensation or benefit received from any of the
affiliates, including stock grants and options. They also ask the
executives to disclose any equity or partnership interests in the
affiliates.

     Enron formed many of the affiliates to buy company assets
such as power plants and natural-gas pipelines. That allowed Enron
to move debt associated with those projects off its books.

     The affiliates bought the assets with borrowed money. They
plan to repay the debt by eventually selling the assets. Enron
might be liable for any shortfall between the sales proceeds and
the debt. That could amount to at least $3.3 billion if the assets
don't generate any money, a remote possibility, the company has
said.

                            Few Answers

     Investors and analysts pressed Enron Chief Executive Officer
Kenneth Lay for details on the finances of the partnerships in a
conference call Tuesday.

     Today, Enron spokeswoman Karen Denne didn't respond to
questions about one of them, ES Power 3 LLC.
     Texas records list 78 Enron executives and employees as
officers, directors and managers of ES Power 3 LLC. The entire
Enron board is also listed.

     Shares of Enron $1.15 to $15.20 in late trading.

--Russell Hubbard in the Princeton newsroom at 609-750-4651, or at