- The Washington Times - Monday, July 29, 2002

Why was Robert Rubin the former treasury secretary in the Clinton-Gore administration and, since 1999, chairman of Citigroup's executive committee so obsessed with now-bankrupt Enron's credit rating? And why doesn't Sen. Joseph Lieberman Al Gore's vice-presidential running mate and chairman of the Enron-investigating Governmental Affairs Committee want to know? The public deserves answers. After all, it has now become clear that maintaining its investment-grade credit rating was the only opportunity Enron had last fall to survive the tsunami its financial chicanery had unleashed. And nobody was more directly involved in efforts to maintain Enron's credit rating than Mr. Rubin. The recent details of Citigroup's complicity in Enron's financial collapse explain why.
Evidence has emerged that Citigroup established several offshore shell corporations in the Cayman Islands between 1997 and 2001. Their sole purpose appears to have been to help Enron disguise billions of dollars of debt, a practice that accelerated after Mr. Rubin's arrival. Enron never disclosed these de facto loans as debt on its balance sheet. Not only did this Citigroup-organized subterfuge permit Enron to maintain its coveted credit rating, but, as testimony in March by executives from credit-rating firms before Mr. Lieberman's own panel confirmed, Enron actually exploited the disguised debt to obtain an upgrade of its credit rating in March 2000.
The ruse significantly contributed to the expansion of Enron's house of cards from less than $10 billion in revenue in 1995 to more than $100 billion in 2000. Enron hurtled toward bankruptcy in 2001, however, eventually costing its shareholders more than $50 billion; other investors lost billions of dollars more in worthless Enron bonds that were linked to the offshore shenanigans Citigroup organized.
Mr. Rubin is the elephant in the Enron graveyard that Mr. Lieberman wants to ignore. Collecting more than $40 million last year as the chairman of the executive committee, Mr. Rubin did his best to earn every dime, exerting herculean efforts to prevent the exposure of Citigroup's role. In doing so, he left his fingerprints all over Enron's death spiral.
When Enron's financial manipulations first surfaced last October, its stock began to plunge. On the morning of Nov. 8, the firm restated its earnings since 1997, reducing profits by $586 million. That same day, Mr. Rubin telephoned Peter Fisher, the undersecretary of the Treasury for domestic finance, and asked him to intercede with the credit-rating agencies on Enron's behalf. Mr. Fisher rejected Mr. Rubin's highly improper request. On Nov. 9, two credit-rating agencies downgraded Enron's rating to a notch above junk status. On the same day, in a desperate effort to survive, Enron agreed to be purchased by Dynegy, a much smaller rival.
If the merger had taken place, not only would Citigroup's investment bank share nearly $100 million in fees, but Citigroup would also likely prevent the disclosure of its role in creating the offshore sham corporations that were instrumental in disguising Enron's debt. But Enron's stock continued to plummet, jeopardizing the merger, the fees and the exposure of Citigroup's role and its own unsecured loans to Enron, which reportedly approach $750 million. When a downgrade to junk status appeared imminent in late November, Mr. Rubin once again went to the phones, directly contacting Moody's to no avail. The agencies downgraded Enron's debt to junk status on Nov. 29, sealing its bankruptcy three days later.
At the March hearing, Mr. Lieberman audaciously chastised the credit-rating agencies, telling their managing directors, "[Y]ou weren't as aggressive [with Enron] as you should have been."
"This was not a ratings problem. It was a fraud problem," Ronald Barone of Standard & Poor's replied. "We're not forensic accountants."
Mr. Rubin may not be a forensic accountant, either. But given the crucial role he personally played in lobbying the Bush administration and contacting Moody's on behalf of Enron, why wouldn't Mr. Lieberman want to know why Mr. Rubin did what he did?


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