DATE=7/28/03

TYPE=CORRESPONDENT REPORT

TITLE=ENRON SETTLEMENT (L-O)

NUMBER=2-305904

BYLINE=MICHAEL BOWMAN

DATELINE=WASHINGTON

CONTENT=

VOICED AT:

INTRO: Two major U-S financial institutions have agreed to pay a total of 255-million dollars to settle charges that they helped hide the true financial condition of the now-defunct energy corporation, Enron. V-O-A's Michael Bowman has details.

TEXT: Under Monday's settlement, J-P Morgan Chase will pay 135-million dollars, and Citigroup 120-million dollars. The U-S Securities and Exchange Commission (S-E-C) says most of the funds will go to compensate victims of the Enron scandal -- including stockholders who saw the value of Enron shares plummet from nearly 100-dollars per share to mere pennies over a 2-year period.

Following Enron's 2001 bankruptcy, federal authorities probed J-P Morgan Chase and Citigroup's dealings with what had been America's seventh-largest company. Earlier this year, congressional investigators concluded the banks had helped Enron devise complex transactions that hid more than 60-billion dollars in debt.

In a statement, the head of the S-E-C's enforcement division, Stephen Cutler, said that institutions are in violation of federal laws if they knowingly assist a company in misleading investors. He added that institutions cannot turn a blind eye to the consequences of their actions. For their part, officials with both banks have said they believed their dealings with Enron were lawful.

A portion of Citigroup's payment will go to settle charges it also helped another energy corporation, Dynegy, manipulate its financial statements to underreport debt. Under the settlement, both J-P Morgan Chase and Citigroup will avoid prosecution but must alter their business practices.

The Enron bankruptcy was the largest collapse in U-S corporate history. Along with several other scandals, the Enron case brought new scrutiny to balance sheets in companies across the United States. Once considered a "safe" and profitable investment for retirees, the Enron collapse robbed individual investors and U-S pension plans of tens of billions of dollars, and was blamed for a drop in overall U-S investor confidence. (SIGNED)

NEB/MCB/FC