March 11, 2003
Enron Broadband charges coming

Prosecutors are preparing to file charges against a number of Enron Broadband Services (EBS) executives for various shady deals involving movies-on-demand over the Internet. It's the usual gaggle of booking vast future projected earnings as current income, accounting skulduggery, and insider trading that has characterized Enron since it all fell apart in 2001. The story doesn't name any execs, just notes that it's mostly obscure fish this time around despite Jeff Skilling's relentless pimping of EBS.

One person who comes off well in the story is from Arthur Andersen, of all places:

The [Blockbuster] transaction was also a source of concern for Arthur Andersen accountants, according to testimony from the Andersen obstruction of justice trial last year. Andersen partner Carl Bass, a member of an internal review team demoted for disagreeing with Enron on interpretation of accounting rules, testified that he discouraged Enron's attempt to sell its share of the Blockbuster deal to CIBC because it was not "a real business with cash flows."

When Enron canceled the Blockbuster deal in March 2001, Bass wrote in an e-mail to a colleague that "one would think ... that there should be a loss reported."

Quite the contrary, the company reported a further $58 million in revenue by marking-to-market the transaction, even though there are no indications the business ever found any other partners to continue the service.

Typical. EBS was last in the news a few months ago when they pleaded guilty to tax evasion. As Binkley noted, their warehouse on Shepherd (not far from where I live) was stacked full of hardware but was claimed to be empty. It can be so hard to tell the difference sometimes, can't it? I blame poor lighting.

Not that it would have done much here, but the Lege is debating a bill that would give the Attorney General more power to crack down on certain types of business fraud, mostly involving people who manage state funds and who have conflicts of interest. But hey, every little bit helps.

Posted by Charles Kuffner on March 11, 2003 to Enronarama | TrackBack

And if any charge shall be substantiated, let the guilty be punished. --Eustathius, bishop of the city of Sebastia, 4th C. CE

Posted by: Michael on March 12, 2003 5:52 PM