Enron Probe Shifts Focus To Tax Deals

by Leroy Baker, Tax-News.com, New York

22 January 2003

According to a Washington Post report published on Tuesday, collapsed energy-trader Enron's shady tax dealings have come under increased scrutiny as court-appointed bankruptcy examiner, Neal Batson filed his report with the US Bankruptcy Court yesterday.

Although details of the report are unlikely to be made public until mid-February, the newspaper revealed that:

'Enron records show that...undisclosed tax deals added more than $1 billion in 'paper' profits to Enron's financial statements between 1996 and the company's bankruptcy filing in December 2001, helping it boost its stock price.'

If Mr Batson and his legal team can prove that tax or accounting rules were broken by the company, then he may be able to sue the financial institutions and law firms which helped Enron structure its tax affairs.

However, speaking last year, the energy trading firm's former top tax counsel, Robert J. Hermann announced that the complex deals did not violate US tax law:

'The government is not going to like these deals,' he revealed, continuing: 'People can disagree on what works within the written rules...If you know the rules, you don't have to break the rules, you just use them. That's what lawyers and accountants do.'

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