Page 1 |
Page 2 |
jj Page 3 |
CFO Andy Fastow |
CAO Richard Causey |
Prosecutors
called it "their most incriminating document."
The "Global Galactic" document was a three-page
handwritten tally sheet of existing agreements between
Enron and LJM (a partnership set up by CFO Andy
Fastow). The popular name for the document
derives from the entry "Global Galactic deal" on the
calendar of Enron 's Chief Accounting Officer, Richard
Causey, for a half-hour meeting at 9 A.M.
on September 6, 2000 with Fastow. The agreement
outlined a series of side deals that had transferred
assets from Enron to Fastow's LJM. The transfers
violated accounting rules, but allowed Enron to report
the company's desired end-of the quarter
results. The document, drafted by Fastow, and
bearing the initials of Fastow and Causey (although
Causey, before he plead guilty to one count of
security fraud, planned to deny ever reviewing or
initialing the document), outlined a plan for the
repurchase of the assets in such a way as to guarantee
that Fastow would not incur any losses. The
document, in short, made clear that Enron's "sales" to
LJM were nothing but a sham. Jeffrey Skilling claimed never to have heard about either the document or the side deals described in the document. Fastow, however, having plead guilty and been called as the star prosecution witness, testified that Skilling orally acknowledged the Global Galactic agreement that revealed how Enron removed risks (one prosecution witness used the term "nuclear waste" to describe the toxic nature of the transferred assets) from its balance sheets. If Skilling was indeed aware of the agreements reported in the memo, that would be compelling evidence of security fraud. In the prosecution's view, the Global Galactic document put LJM (and Fastow, Causey, and Skilling) at the center of the web of Enron's criminal schemes. |