Posted on 12/23/2002 7:22:07 PM PST by Robert357
A federal judge ruled Monday that "explosive" e-mails about J.P. Morgan Chase and Co.'s oil deals with Enron could be shown to a jury in a $1.1 billion lawsuit over who should pay for the failed financial pacts.
Morgan is suing 11 insurance companies for refusing to pay more than $1 billion for guarantees on failed oil and gas trades arranged between Enron and a Chase-affiliated offshore company called Mahonia Ltd.
The Chase affiliate made six deals with Enron beginning in 1998, in which Enron was paid in advance for oil and natural gas to be delivered months or years later.
The insurance companies counter the trades were really disguised loans, financial shams designed to pump more cash into Enron.
The e-mails center around Morgan Vice Chairman Donald Layton's 1999 review of internal accounting.
"We are making disguised loans, usually buried in commodities or equities derivatives," Layton wrote in one of the e-mail messages.
In a 10-page decision, Manhattan District Judge Jed Rakoff said the jury's interpretation of the e-mails could be important to how the panel decides the case.
It does not constitute `unfair' prejudice any more than would, say, a confession," the judge wrote, adding that jurors could adopt the opposite view and find the messages "innocuous."
At an earlier hearing in the trial, the judge referred to Layton's comments as "explosive," depending on whose interpretation the jurors believed - the bank's or the insurance companies'.
Layton and Morgan said the e-mails should not be admitted because he was not referring to the Enron-Mahonia transactions but to upfront cash payments for commodities transactions.
The bank argues the insurance companies gave "crystal clear" assurances to back the deals if Enron failed to deliver on its promises and are now trying to back out of their obligations.
The e-mails are expected to be shown to the jury Thursday or Friday, when Layton is scheduled to testify. Closing arguments are expected next week.
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Well, if they're OJ caliber jurors.
Full disclosure: I have, in the past, profited from JP Morgan Chase (formerly Chase Manhattan) stock options. But I was never stupid enough to trust them.
The Institute of International Finance, Inc. (IIF), is the world’s only global association of financial institutions. Created in 1983 in response to the international debt crisis, the IIF has evolved to meet the changing needs of the financial community. Members include most of the world’s largest commercial banks and investment banks, as well as a growing number of insurance companies and investment management firms. Among the Institute’s Associate members are multinational corporations, trading companies, export credit agencies, and multilateral agencies. Approximately half of the Institute’s members are European-based financial institutions, and representation from the leading financial institutions in emerging market countries is also increasing steadily. Today the Institute has more than 320 members headquartered in more than 60 countries.
And what the hell is a ".quagga" file type, anyway?
Morgan should not only not collect from the insurance companies, but some investment bankers belong in jail.
As to conspiracy theories, I have always been amazed at how loudly the Dems screamed Enron, the Texas energy company and then fell silent. Sort of makes one wonder if Clinton was vulnerable and he reviewed his FBI files and made a few phone calls to Dem's reminding them that only "he who has not sinned should cast the first stone." Conversly Joe Looserman was a friend of Enron and the next great hope for the Dem's.
On the face of it, that's a loan. It has a barter component to it, but it's still a bank putting up cash now and agreeing to be paid back later.
If that a "disguised" loan, I wouldn't call it much of a disguise. It looks like they insured against Enron defaulting; I wonder if they hedged the price of oil as well. If they did, it sounds like prudent bankers with too many lawyers helping them.
I guess the accounting gotcha is on Enron's side: instead of reporting this as debt, they called it a sale and booked the money as revenue. That was not cool.
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