Citigroup Forks Out $2 billion To Settle Enron Suit
Citigroup has agreed to pay $2 billion to Enron Corp. to settle a class action lawsuit from investors. Citigroup was accused of having a role in a big accounting fraud scandal at Enron.
This is a huge settlement, but Citigroup has made bigger ones. Previously, the company agreed to pay $2.58 billion to investors in relation to a scandal involving WorldCom.
“It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us,” Citigroup CEO Charles Prince said in a statement. “By doing so, we will be better positioned to realize our goals. We acknowledge and appreciate the determined and professional efforts of the Regents of the University of California and its advisors in working with us to achieve a settlement that meets the goals of all parties.” Citigroup denies that it broke the law. Fred Barbash of the Washington Post points out,
The case is one of an unprecedented blizzard of claims and charges stemming from the Enron collapse in 2001. Former Enron executives Jeffrey K. Skilling and Kenneth L. Lay are awaiting criminal trials on fraud and conspiracy charges.
The Arthur Andersen accounting firm all but went out of business after it was convicted of complicity in the Enron case, a conviction reversed this month by the U.S. Supreme Court because of flawed jury instructions.
Lawsuits were filed in 2002 against Citigroup and other banks accused of being involved in the Enron scandal, by Enron investors led by the University of California.
“We are very pleased with the size of the settlement,” said William Lerach, the lawyer representing University of California investors. “It’s particularly significant in that several large, similarly situated banks remain as defendants in the case, so this is a step down the road, not the last step on the road.”
J.P. Morgan Chase, Merrill Lynch, Credit Suisse First Boston and Goldman Sachs are among the banks that have yet to settle with the investors. They may be feeling more pressure to do so now.