The first criminal trial involving former Enron Corp. executives opened Tuesday with prosecutors charging that the defendants conspired with Wall Street bankers to carry out a sham transaction.
Prosecutors said in opening statements that Enron sold three electricity-producing barges moored off the coast of Nigeria at the end of 1999 in a sham deal designed to help the energy company appear to have met earnings targets.
They said buyer Merrill Lynch & Co. agreed to the deal to acquire more lucrative investment banking business from Enron, which at the time was a high-dollar client courted by Wall Street.
"This was really no more than a loan -- a loan to help Enron out of a jam at the end of 1999," Assistant U.S. Attorney John Hemann told the jury.
The barge deal is not among the financial indiscretions that pushed Enron into bankruptcy in 2001. Prosecutors say, however, that it shows Enron was willing to employ suspect financial practices to meet lofty earnings targets.
Four former Merrill Lynch executives and two former mid-level Enron executives were charged last year with conspiracy and fraud.
Defense attorneys disputed the government's claims.
Lawrence J. Zweifach, who represents James A. Brown, the former chief of Merrill Lynch's asset lease and finance group, presented a handwritten note in which he said Brown listed several concerns about the December 1999 barge deal.
"Every item he wrote down reflects he was worried Merrill Lynch was at risk in this investment," Zweifach said.
Attorneys for former Enron executive Daniel O. Boyle and former Enron accountant Sheila K. Kahanek each called their clients "bit players" in comparison with higher-ups at Enron who signed deal approval documents or received bonuses for their work on the barge deal. Some of those executives are among prosecution witnesses who have not been charged with any crimes.
The first witness was a former Enron employee who told jurors that Kahanek yelled at her for drafting a document that outlined the barge agreement.
"She told me I had jeopardized the deal by putting certain information in the document, and that if it fell into the hands of [auditor] Arthur Andersen the deal was over," Amanda Colpean said.
Each of the six executives is charged with one count of conspiracy and two counts of wire fraud. Three of them also face charges of lying to either a grand jury, the FBI or a congressional investigator about whether they knew of the barge deal.