Citigroup to Pay $1.6B to Settle Enron Claims
Citigroup has agreed to pay $1.66 billion to settle claims that it aided Enron’s downfall by setting up complex financial structures that hid and amplified the company’s financial problems.
Citigroup was the last of 11 banks to settle claims by the Enron Creditors Recovery Corp., and its payout will be the largest of the group, Reuters reports. The creditors group had sought $18 billion from Citigroup in the so-called “MegaClaims” suit filed in 2003, the Wall Street Journal reports (sub. req.).
Citigroup also agreed to give up an estimated $4.25 billion in claims as part of the deal, Bloomberg reports. The settlement still must be approved by U.S. Bankruptcy Judge Arthur Gonzalez.
The move comes about a week after a federal judge refused to move the lawsuit out of bankruptcy court.
Citigroup had also sought dismissal of the lawsuit in January, the Journal story says. “Run by felons and self-confessed fraudsters, and under the supervision of a compliant board of directors that at best chose either not to look, or to look the other way, Enron as a matter of law has only itself to blame,” the motion said.
The bank said in a statement that it denies wrongdoing and settled to avoid litigation.
