Enron’s top executives raked in millions “they never should have received” through a complex series of partnerships, pressuring underlings to make deals that fattened their own wallets at the expense of the company’s bottom line, an internal investigation has found.
A report commissioned by the bankrupt energy giant took particular aim at former Chief Financial Officer Andrew Fastow and ex-General Manager Michael Kopper for gross conflicts of interest.
While he was the top financial executive of Enron, Fastow also became the architect and steward of two partnerships, LJM Cayman and LJM Partners.
There was no wall between the entities and Enron, and Fastow “was in a position to exert great pressure and influence” as LJM negotiated to buy Enron assets, the report states.
Enron’s treasurer, Jeff McMahon, even complained to a higher-up about Fastow’s heavy-handed tactics.
“I find myself negotiating with Andy on Enron matters and am pressured to do a deal that I do not believe is in the best interests of the shareholders,” he wrote in a memo.
Fastow and Kopper were also involved in a partnership called Chewco, and another Enron employee was rankled at being asked to accept deals with Chewco that didn’t benefit the energy giant, the report said.
Through the various partnerships – which hid Enron’s massive debt – the execs took in tens of millions “they never should have received,” the report concluded.
Fastow made $30 million, while Kopper got $10 million and two others got $1 million windfalls.