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Enron: US court convicts five over Lagos power project
Ayo Olesin with agency reports
Five persons, including four bankers with top investment bank, Merrill Lynch, and a former finance executive of failed energy company, Enron, were convicted on Wednesday by a United States court for involvement in a fraudulent transaction relating to the Lagos State Government-initiated Independent Power Project.
A Texas jury handed down criminal convictions against the former executives for their roles in the deal in which Enron purportedly sold interests in three power-generating barges moored offshore Ikorodu in 1999.
The deal was found to be fake and Enron booked a profit of $12 million from the �sale� in order to meet Wall Street earnings targets.
The six-week trial stemmed from an investigation of the energy trader�s collapse three years ago.
Assistant US Attorney General, Mr. Christopher Wray of the Department of Justice Criminal Division said the verdict �signals that executives committing corporate fraud will be vigorously investigated and prosecuted�, according to Agence France Presse, quoting US media.
�Those who aid such fraud will meet the same fate,� said Wray in a statement.
A sixth defendant, Sheila Kahanek, a one-time Enron accountant, was acquitted, according to media reports.
The verdict is part of the government�s two-prong approach to corporate fraud, Wray said.
�First, the verdict metes out individual justice as to the five defendants convicted today; second, the verdict goes hand-in-hand with the sweeping reforms mandated by the government�s deferred prosecution agreement with the Merrill Lynch firm,� Wray said.
Other top Enron officials, including former chairman, Mr. Ken Lay, and former chief executive officer, Mr. Jeff Skilling, are awaiting trial.
Former Enron chief financial officer, Mr. Andrew Fastow, had pleaded guilty and agreed to serve 10 years in prison.
He is yet to be sentenced and is said to be cooperating with prosecutors.
The power project, which was designed to supply power to industrial areas in Lagos State, had been dogged by controversy from the beginning with the Federal Government struggling to take control at a point.
Since the collapse of Enron, an energy consortium formed by AES and Yinka Folawiyo Power, an indigenous firm, had been running the plants, which generate about 170 megawatts of electricity daily.
The National Electric Power Authority, which purchases power from the project, had also complained that it was paying a high bill which it is unable to pass to customers due to lapses in the initial power purchase agreement.
This prompted the authority to initiate efforts to streamline all the entry of IPPs and establish clear guidelines that will regulate the entry of new IPPs.
Plans to expand the power project have also been put on hold by the Lagos State Government.
Meanwhile, some new gas-fired power projects, including Shell�s Afam power project and Agip Nigeria plant in Delta State, would come on stream in the first quarter of 2005.
The Managing Director of NEPA, Mr. Joseph Makoju, said recently in Lagos that the main contract agreements had been signed with Shell and that the Power Purchase Agreement would have to be finalised before the oil major moves to the site.
Shell has a Rehabilitate, Operate and Transfer arrangement with Shell in respect of the Afam Thermal Plant, which would inject some 600 megawatts of electricity into the system.
The Agip Power Plant will be commissioned by December and will begin supply of about 400 megawatts to the national grid early next year.
The PUNCH, Friday, November 5, 2004.
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