The Great American Stickup by Robert Scheer

Author:Robert Scheer
Language: eng
Format: epub, pdf
Publisher: Perseus
Published: 2010-08-10T16:00:00+00:00

Citigroup was vital to the funding of that complex financing. Quoting the Dow Jones News Service of February 26, 2002, the complaint notes: “Between them, Citigroup and JP Morgan/Chase served as lead manager on more than $20 billion in syndicated bank loans to Enron over the past decade, with Citigroup also underwriting more than $4 billion in stock and bond offerings for the company.”

With Rubin’s Citigroup having such a huge investment in the flailing firm, one would have to be exceedingly gullible to believe his pleas to Treasury to intervene on behalf of Enron were the act of a wise do-gooder. However, beyond previous credit arrangements, which would have given it the clout to inspect Enron’s books much earlier, Citigroup was also actively and deeply involved in Enron’s endgame, making a further mockery of Rubin’s claim to be above the fray. The legal brief lays out clearly what Rubin pointedly ignores in his book:In late 11/01, JPMorgan and Citigroup were desperately trying to arrange the sale of Enron to Dynegy so they could split a $90 million fee and so Enron would not go bankrupt, which they knew would lead to suits over, and investigations into, their prior deals with Enron—which they knew would be highly embarrassing and could expose them to massive liability to third parties and subordination of their creditor claims against Enron. Their scheme could not succeed without keeping Enron’s investment-grade credit rating in place until the sale to Dynegy could be completed. So, on or about 11/8/01, Rubin, the vice chairman of Citigroup, and Harrison, the chairman of JPMorgan, called Moody’s—a key rating agency—and pressured Moody’s to keep Enron’s investment grade credit rating in place until JPMorgan and Citigroup could complete the sale of Enron to Dynegy.

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