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Sunday, Nov 8, 2009
"Did I feel betrayed? Yeah, a lot," said an Enron executive and friend of both Mordaunt and Glisan who would speak with Salon only on the condition of anonymity. "I was extremely surprised."
After the news about Mordaunt and Glisan broke inside the company, colleagues rushed to see who else might have been involved in the scandal. After Mordaunt was escorted out of the Enron building, said one executive, "I called a number of people I know who work in the finance division and said, 'Please tell me that you didn't invest in LJM!"
LJM along with LJM2 and Chewco have become the most notorious of the shady accounting partnerships set up by Enron. Set up, it is now believed, specifically to hide Enron debt from public scrutiny, the partnerships proved to be the catalyst for Enron's fall.
On Nov. 8, 2001, the same day the company announced that its financial statements from 1997 through the first half of 2001 "should not be relied upon," Enron filed an "8-K" form -- an interim document required for certain types of financial events -- with the Securities and Exchange Commission. In that form, Enron disclosed that some of the "limited partners" in the partnerships "were, at the time of the investment, non-executive officers or employees of Enron." Enron also announced that it was "terminating the employment" of Glisan and Mordaunt for participating in the LJM partnerships.
"At the time these individuals invested in the limited partnership, LJM1 had ceased entering into new transactions with Enron," Enron's 8-K stated. "However, some pre-existing investments involving LJM1 and Enron were still in effect, and Enron believes that these investments resulted in distributions or payments to LJM1 and to the limited partnership in which these individuals invested."
According to the congressional investigator, Mordaunt reaped her LJM windfall after she was approached by an Enron executive, who asked her if she wanted to make some money. Yes, she said. "Give me a check for $6,000," he told her, according to the congressional investigator. Later, the executive asked Mordaunt for her bank account number so he could deposit the proceeds from her investment. "How much is it?" she asked. He told her to check her bank account the next day. When she did, she discovered over $1 million had been deposited into her account. The congressional committee is currently investigating the matter.
The Nov. 8 SEC filing also clarified Fastow's role in the company. He was no longer officially on a leave of absence. He "is no longer working for Enron," the filing stated.
At a November news conference, then-CEO Kenneth Lay reported that he knew about the partnerships but not about Mordaunt's and Glisan's role in them.
Asked last week about the allegations against Mordaunt and Glisan, Enron spokesman Mark Palmer said, "I have no idea." Palmer noted that a special committee had been appointed "to look into" such matters. "I know they're looking into everything surrounding those transactions," he said, referring to the partnerships.
Said another former Enron executive after hearing about Mordaunt's and Glisan's lucrative deals: "Hillary Clinton should have gone to their school of futures trading."
