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Tuesday, 30 July, 2002, 22:40 GMT 23:40 UK
Merrill rejects claims over Enron
Merrill Lynch logo
Merrill Lynch has told US lawmakers that its dealings with Enron were "appropriate and proper".

The investment bank made the statement in reaction to claims by a US congressional panel that it had helped Enron to manipulate its balance sheet.

Two investment bankers who were involved in Merrill Lynch's dealings with Enron have declined to speak before the panel.

Schuyler Tilney, who has been placed on leave by Merrill Lynch, and former Merrill colleague Robert Furst, both invoked their fifth amendment rights to avoid answering questions about Merrill's banking links with Enron.

Allegations denied

"Merrill Lynch strongly believes that our limited dealings with Enron were appropriate and proper," the firm said in a statement.

"At no time did we engage in transactions that we thought were improper.

"At no time was Merrill Lynch's research compromised.

"Our ratings represented the independent views of our analysts and were not among the most bullish on Enron," the statement added.

Deception claims

Members on the Senate's Permanent Subcommittee on Investigations have claimed that Merrill engineered deals with Enron to manipulate the energy company's earnings.

The committee released several internal Merrill documents which panel chairman Senator Carl Levin said showed Merrill had knowingly helped Enron to "deceptively create revenue."

Senators have also claimed that Merrill Lynch replaced one of its research analysts, John Olson, because he failed to be positive-enough about Enron's finances.

But Merrill said the reason for Mr Olson's departure was down to a restructuring programme and had nothing to do with Enron.

Pressures

Mr Olson gave his version of events while speaking on the BBC's World Business report.

"I can go back over ten years really and tell you that various investment bankers had, in no uncertain terms, told me that they would seek to get me fired if I did not put a strong buy recommendation out on Enron, this even pre-dates Merrill Lynch," he said.

"At Merrill Lynch the pressures were not direct because the analysts were insulated to some degree from investment banking intimidation."

"The trouble was that the culture changed over a five year period in which time apparent conflicts became viewed as synergies and the pressure became very strong to say only nice things about investment bank clients."

Merrill's denials of any inappropriate action boosted its share price, which ended Tuesday up 25 cents at $36.50.

 WATCH/LISTEN
 ON THIS STORY
John Olson, a former analyst at Merrill Lynch
"I feel vindicated... most people who dealt with Enron came out as losers"
See also:

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