The Enron saga seemingly got a dose of irony after a court filing last night revealed that the disgraced energy company is suing six of its former bankers and current creditors. Enron named Merrill Lynch (NYSE:MER), Citigroup (NYSE:C), J.P. Morgan Chase (NYSE:JPM), Deutsche Bank AG, Barclays, and Canadian Imperial Bank of Commerce in the complaint, arguing that all six firms "bear substantial responsibility" for its destruction.
The analogy of a convicted bank robber suing the driver of his get-away car for his own bad acts does seem apt here. We all know that Enron did some nasty things, and that in order to do those things, it needed help from outside parties. Three of those outsiders, Citigroup, J.P. Morgan Chase, and Merrill Lynch, have already settled regulatory charges that they helped Enron defraud investors. They still face several huge federal shareholder suits, as well.
What's really going on here, though, is the attempt to subordinate the banks' combined $5 billion in claims on Enron to other creditors. Further, because it's operating under bankruptcy protection, Enron legally must try to get as much money as it can for its creditors, even if that means going after some of them for the others. Enron may be able to get back some of the money it paid to the banks prior to the bankruptcy filing, since it was at the expense of other creditors.
The blueprint for this move was laid out back in July by the court-appointed bankruptcy investigator, Neil Batson. His massive report found ample evidence that the six banks listed in Enron's latest complaint knew exactly what was going on, and that they willfully helped out so that they, in turn, would profit in a big way from all the illegal dealings. They can't claim ignorance, as can other creditors. The report found that they were right in there, down in the muck with Enron, lying and cheating and "aiding and abetting" away.
While rooting for Enron is about as distasteful as cheering the Khmer Rouge, in this case, I hope the banks get what's coming to them. Provided Batson's account is accurate (and there's no reason to think it's not) the banks don't deserve to be sitting among the other duped creditors, waiting for their $5 billion payback. Puhleeze. They's as dirty as Enron is.
