The first Enron-related criminal prosecution to go to trial since the 2002 case against Arthur Andersen begins today in U.S. District Judge Ewing Werlein‘s court in Houston. This Houston Chronicle story reports on the difficulty of finding unbiased jurors in regard to any trial relating to the demonized Enron. Earlier posts on this particular case may be reviewed here, here, and here.
One of the first issues that Judge Werlein will deal with today is various defense motions to dismiss the case based on the Enron Task Force‘s inexplicably late revelation last Thursday that it possessed potentially exculpatory evidence for the defense in statements that former Enron CFO Andrew Fastow made to the Task Force.
In court pleadings, the Task Force has rationalized the late disclosure on the grounds that Fastow’s statements are not really exculpatory. However, that position is highly dubious in that the Task Force admits that Fastow stated that he never used the word “guarantee” in a key phone conversation in which the defendants participated. In that phone call, the Task Force claims a secret side deal was arranged in which Fastow committed Enron to buy back or broker a deal within six months for an interest in the Nigerian Barges that Enron was selling to Merrill Lynch. Such an agreement would have rendered the sale of the interest in the barges not a “true sale” and, thus, made Enron’s financial reporting of such sale fraudulent.
The Task Force is also attempting to minimize its delay in notifying the defense of Fastow’s potentially exculpatory statements by taking the position that it is not going to call him as a witness in its case in chief, but that Fastow is available to testify if the defense chooses to call him. Inasmuch as the Task Force’s case is based largely on Fastow’s alleged agreement to buy the barge interest back from Merrill, even the most credulous of the Task Force’s allegations will have to strain to accept the Task Force’s reasoning here. Stay tuned to learn how Judge Werlein deals with this issue.