Enron, Merrill Ex-Execs Scheduled for Trial

Two former Enron Corp. executives and four onetime Merrill Lynch & Co. bankers are scheduled to go on trial in Houston today, in the first criminal fraud case stemming from the collapse of the energy giant.

Opening statements are expected Tuesday.

The six are accused of helping push through a sham sale so that the energy firm would appear to have met earnings targets.

The Justice Department’s biggest cooperating witness in the probe, former Enron Chief Financial Officer Andrew S. Fastow, isn’t on the prosecution’s witness list. But two of Fastow’s top aides from Enron Global Finance -- the division where Fastow and others cooked up a number of complicated transactions to help the company bury debt and burnish its financial statements -- are on the list.

Michael Kopper and Ben Glisan both pleaded guilty ahead of their boss and are cooperating with prosecutors. Both are likely to be called to testify about a key element of the prosecution’s case: Fastow’s promise to buy back from Merrill Lynch a pair of energy-generating barges moored off the coast of Nigeria.

The defendants are accused of conspiring to keep that promise secret since revealing it would have blown Enron’s accounting plans, the ultimate purpose for the deal.

Prosecutors say Merrill agreed to buy the barges only after Fastow orally promised to repurchase them at a hefty premium.

Because auditors did not know the true nature of the transaction, Enron was able to book the deal falsely as a sale, thereby meeting its 1999 profit targets and adding $12 million in earnings.

The defendants are former Merrill bankers Daniel Bayly, James Brown, William Fuhs and Robert Furst, former Enron accountant Sheila Kahanek and former Enron finance executive Dan Boyle.

All six face charges of conspiracy to commit wire fraud and falsify books and records. Fuhs is charged additionally with obstruction of justice and making false statements. Brown also is charged with obstruction and perjury. All six have pleaded not guilty and are free on bond.

David Adler, a Houston defense attorney, said prosecutors wanted to save Fastow’s testimony for the coming trial against former Chief Executive Jeffrey K. Skilling, who has pleaded not guilty.

“They would rather save their most powerful weapon for their biggest target,” he said. “If they can keep Fastow’s information from Skilling’s lawyers until the last minute, the prosecutors will be happy to do that.”