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Wednesday, 21 August, 2002, 21:07 GMT 22:07 UK
Ex-Enron executive pleads guilty
Michael Kopper testifying before US Congress
Michael Kopper is the first Enron executive to accept responsibility
Former Enron executive Michael Kopper has pleaded guilty to charges of money laundering and wire fraud.

The guilty pleas are the first criminal charges brought against a former Enron employee, and represent significant progress in the US government investigation into the scandal.


The government is striking deals with carefully selected individuals who will lead them through the transactions

Robert Mintz, former federal prosecutor
As part of the plea deal, Mr Kopper will cooperate with prosecutors, and will pay back $12m (7.9m) of assets.

The Reuters news agency also reported that the US Justice Department has asked a federal judge to freeze about $23m of funds controlled by the former Enron chief financial officer Andrew Fastow and other company executives.

"This money is treated as tainted and can be reclaimed by the government," the agency quoted a senior Justice Department official as saying.

Mr Kopper was the right-hand man to Mr Fastow, whose role in Enron's collapse is now coming under intense scrutiny from prosecutors.

Enron was once one of the US's most admired companies, but went bankrupt last December after admitting to questionable accounting practices.

More charges

The US Securities and Exchange Commission (SEC) also announced on Wednesday that it had filed civil charges against Mr Kopper.


We have a wealth of information in our possession suggesting a number of people at Enron took part in fraudulent activities

Ken Johnson, House Energy and Commerce Committee
The SEC said it had charged Mr Kopper with breaking securities anti-fraud laws. Mr Kopper has neither admitted or denied the charges.

Mr Kopper has agreed to handover $12m which the US Justice Department said would be used entirely to help those who were defrauded by Enron.

"Michael hopes these actions demonstrate his deep regret for his own conduct," said Mr Kopper's attorney, David Howard.

"He apologises to all those whose lives have been affected by what he did."

Mr Kopper could be facing a maximum jail sentence of up to 15 years for his crimes.

Profiteering

Mr Kopper worked in Enron's Global Finance unit and took a lead role in the formation of off-balance-sheet partnerships.

Andrew Fastow
The role of Mr Fastow is under scrutiny
These partnerships were largely financed by company stock and had no real value.

They were used to hide $1bn of debt, and thus make the company look financially stronger than it actually was.

An internal investigation by Enron directors blamed Andrew Fastow for creating and operating the partnerships.

But the study also found that Mr Kopper was closely involved, and that this led to considerable personal gain.

It alleged that he earned $10.5m from an original investment of $125,000 in one partnership.

Enron 'not told'

Mr Kopper and federal prosecutor Tom Hanusik described three transactions in which Mr Kopper, Mr Fastow and others all received money without the knowledge of Enron.

One example involved a partnership called 'Southampton Place' and used outside investors as part of the plan.

"They did funnel that money back to me and I then proceeded to give some of that money to the Enron CFO," said Mr Kopper.

"We never informed Enron of the loans I made or the distributions we got."

Previously silent

Government investigators are looking into how much Enron managers - from former chairman Kenneth Lay on down - knew about the partnerships.

The complexity of the partnership arrangements has made it difficult to apportion blame to individuals involved in the Enron affair.

Pressure has been mounting on investigators, who have already charged senior executives in the Andersen, Adelphia and WorldCom scandals.

"The government is taking the traditional route of applying tremendous pressure to individuals and striking deals with carefully selected insiders who will lead them through the Byzantine transactions," said former federal prosecutor Robert Mintz.

The spokesman for the House Energy and Commerce Committee, Ken Johnson, said many more Enron executives could be charged.

"Clearly this is the first shoe to drop, based on the information our committee has in its possession," Mr Johnson said.

"We have a wealth of information in our possession suggesting a number of people at Enron took part in fraudulent activities," he added.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Stephen Evans
"Convicting people at the top will be hard"
Damon Silvers, Trades union movement lawyer
"How they are brought to justice is very important to us"
Linda Thomsen, Securities and Exchange Commission
"We come in after the events occur"
Ron Kilgard, lawyer for some former Enron employees
"There are several aspects of Mr Kopper's plea that are helpful"

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21 Aug 02 | Business
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