Regulator hails Enron guilty plea

Former Enron executive Michael Kopper pleaded guilty on Wednesday 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 action against Mr Kopper is an important chapter in the story of Enron's collapse," said Stephen Cutler, head of enforcement at the Securities and Exchange Commission (SEC).

"But much of the story remains untold."

As part of the plea deal, Mr Kopper will co-operate with prosecutors, and will pay back $12m (£7.9m) of assets, but he could still face a jail term of up to 15 years.

The Reuters news agency also reported that the US Justice Department has asked a federal judge to freeze about $23m of funds controlled by 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 (SEC) also announced on Wednesday that it had filed civil charges against Mr Kopper.

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

These partnerships were largely financed by company stock and had no real value.

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

An internal investigation by Enron directors blamed Mr 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.

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 show 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.