Yesterday’s testimony from various current and former Enron executives confirms, I think, the importance of the questions we raised here a few days ago.
That is, who else got to sign on to one of Andy Fastow’s outside partnerships, in which investors incurred no risk yet made windfall profits? We now know that many non-Enron employees got into these deals. Fastow apparently used them as chits on occasion when dealing with investment banks who did other business with Enron, though sometimes the Enron business was the plum he used to leverage folks into the partnerships.
One thing that’s clear is that all the partnerships were not alike. Or at least not everyone came in on the same terms. Some were the uber-sweetheart deals that made millions. Others only got investors who had to be coaxed into the deal.
What is important to know, however, is just who all the partners were. Why? Because if there was financial or political corruption going on which reached outside of Enron, this almost has to be where you’d find it.
There’s even apparently an example of a partnership deal being used in this fashion with an Enron employee. Soon after quasi-whistleblower Jeffrey McMahon got reassigned for questioning Fastow’s partnership deals, his replacement got cut in on a piece of the action. Says today’s Times …
A short time later, Mr. McMahon was replaced as treasurer by Ben F. Glisan Jr. According to an investigation by Enron’s board, Mr. Glisan put $5,800 in one of the partnerships organized by Mr. Fastow and two months later was given $1 million.
More to come later on conflicts of interest and ingenious ways to hedge your bets against business losses.