Ex-Enron Treasurer: Barge Sale Was Wrong

Enron Corp.'s (search) former treasurer said he always thought the frenzied sale of three barges to Merrill Lynch & Co. (MER) at the end of 1999 was "blatantly wrong."

"It appeared that Enron was making a lot of effort on a relatively small deal that was wrong," Ben Glisan Jr. (search) testified Wednesday in the ongoing fraud and conspiracy trial of four former Merrill Lynch executives and two former midlevel Enron executives.

Glisan, who is serving time in prison for his role in the Enron debacle, bolstered the government's contention that the deal was really a loan because Enron had promised the brokerage would be bought out within six months. Enron booked a $12 million pretax profit from the deal.

Glisan sought to have Enron keep its promise after he replaced Jeffrey McMahon as treasurer in March 2000 so Enron would avoid a reputation for failing to keep its word among Wall Street's titans.

The six defendants contend Enron was never obligated to find a buyer for or buy back the barges.

Glisan, 39, was indicted in May 2003 on two dozen counts including money laundering, fraud and conspiracy. A year ago he pleaded guilty to one count of conspiracy and is one year into a five-year prison sentence.

Before his testimony, Glisan invoked his Fifth Amendment right against self-incrimination.

U.S. District Judge Ewing Werlein granted a request from prosecutors that Glisan receive immunity from being charged with any other crimes during his tenure at Enron and compelled Glisan to testify. He was to continue Thursday.

Glisan said Enron increasingly relied on shady deals and financing methods to cover for bad investments or manufacture income to meet impossibly lofty earnings targets and maintain its status as a Wall Street favorite.

By 2000, he feared ever-increasing dubious deals and accounting spelled impending disaster for the once-envied company and he was constantly "masking those issues."

"I felt it was my job to help Enron look stronger than it was," the former CPA told jurors.

Enron crashed in December 2001, leaving thousands out of work and touching of a string of corporate scandals that roiled Wall Street and generated tougher white collar crime penalties.

Glisan played a key role in following through on Enron's alleged buyback promise after he replaced McMahon as treasurer in March 2000.

He sent an e-mail to Enron's barge deal team in May 2000 that said, "To be clear, (Enron) is obligated to get Merrill Lynch out of the deal on or before June 30. We have no ability to roll the structure."

When an outside buyer hadn't surfaced as the deadline neared, Glisan said he asked one of the defendants, former Merrill executive Robert Furst, if Merrill would keep the barges a little longer.

"He didn't think that was such a great idea," Glisan said.

LJM2, created by former finance chief Andrew Fastow (search), was a partnership that helped Enron hide debt and inflate profits, bought the barges at a premium for $7.5 million in late June 2000. However, LJM2 got a similar buyback promise with a January 2001 deadline, Glisan said.

Glisan noted he told Richard Causey, then Enron's chief accounting officer, that LJM2 would get the "same terms" as Merrill had received. Causey has pleaded innocent to charges in a separate case with fraud, conspiracy, insider trading and money laundering and is awaiting trial.

Glisan swiftly said "No" when asked if he believed in 1999 that he was working for one of the best companies in America.

Glisan started at Enron in 1996 and received $100,000 in salary and what he called a "modest" bonus of $20,000. By 2000, he earned up to $200,000 in salary and an $800,000 mixture of a bonus and stock options.

Also that year he invested more than $5,000 in one of many partnerships and deals Fastow orchestrated and pocketed a $1 million return within weeks. Fastow pleaded guilty to two counts of conspiracy in January and is cooperating with the government.

But Glisan declined to name anyone as having corrupted him.

"We're all responsible for our own actions and I'm taking responsibility for mine," he said.

In addition to Furst, the defendants in the barge case are former Merrill executives Daniel Bayly, James A. Brown and William Fuhs; former Enron finance executive Dan Boyle, who was on Fastow's staff and former in-house Enron accountant Sheila Kahanek.