Enron accuses Citigroup of muzzling ex-staff
By Joseph Rebello
3 October 2007
The Associated Press
 
A multibillion-dollar fight between Enron Corp. and the Wall Street banks that financed the energy company before it collapsed in 2001 has flared up over accusations that Citigroup Inc. is preventing its former employees from testifying about what they know.
 
In papers filed with the U.S. Bankruptcy Court in Manhattan, a lawyer for Enron, former parent company to Portland General Electric, said Citigroup is using severance agreements to "intimidate former employees into silence, thereby impairing Enron's ability to obtain information for use at trial."
 
The lawyer, William McSherry Jr., asked U.S. Bankruptcy Judge Arthur Gonzalez to prohibit Citigroup from using its severance agreements to prevent their testimony.
 
"Citi includes a clause in some severance agreements that purports to bar former employees from 'disparaging' Citi," McSherry said in a letter to Gonzalez on Monday.
 
"As a result, former Citi employees with information relevant to the case are unwilling to talk because they are concerned that if they give testimony unfavorable to Citi, Citi will assert that they have breached this clause."
 
A Citigroup spokesman wasn't available for comment Tuesday. Douglas Davis, an attorney representing Citigroup in the lawsuit, also wasn't available for comment.
 
The accusations mark the resumption of a long-stalled lawsuit over whether Citigroup and several other big Wall Street banks "participated with a small group of senior officers and managers of Enron in a multiyear scheme to manipulate and misstate Enron's financial condition." The lawsuit is among the largest assets available to repay Enron's creditors.
 
Enron, which is now known as Enron Creditors Recovery Corp., so far has returned nearly $14 billion to the company's creditors. If the company prevails in its court fight with Citigroup, it stands to collect billions that would be used to pay creditors, John Ray, the company's chief executive, said in a recent interview.