This NY Times article reports on a potentially important development in the Enron-related criminal case against two former Enron executives and four Merrill Lynch executives dubbed the “Nigerian Barge case.” The Houston Chronicle story on these latest developments is here.
A day after the Enron Task Force had elected not to list former Enron CFO Andrew Fastow as a witness in the case, the Task Force advised the defendants that the government has in its possession potential exculpatory evidence for the defense relating to Mr. Fastow. Defendants immediately asked U.S. District Judge Ewing Werlein Thursday to conduct an evidentiary hearing to find out why prosecutors have withheld until the last minute evidence from Fastow that could help the defense.
According to the defense motion, in one FBI interview, Fastow said he did not even recall one of the defendants — former Enron finance executive Dan Boyle — being involved in Enron’s 1999 sale to Merrill Lynch of an interest in electricity-generating barges in Nigeria.
As noted in this earlier post, the government’s theory of the case is that Enron’s sale of an interest in the barges to Merrill was a sham and not a “true sale” for accounting purposes because Fastow orally promised Merrill in a secret side deal that Enron would either buy back the barges or broker a deal for them the following year. However, none of the deal documents contained that promise, and the the parties contirmed in the written documents that they were relying only on the representations and agreements contained in the written agreements between the parties. Fastow’s statements to the FBI and Justice that no such oral agreement existed could be strong evidence for the defense that the alleged side deal did not exist.
In a pre-trial conference last Thursday, Judge Werlein was openly skeptical about several of the prosecutors’ statements regarding why they had not turned over potentially exculpatory evidence in their possession to the defense. It will be interesting to see how this eminently fair Judge reacts to these latest developments.