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Outlook worsens for Enron bosses

David Teather— © Guardian Newspapers Limited 2004

New York: A key defendant in the Enron prosecution on Wednesday agreed a last-minute plea deal, potentially worsening the outlook for his former bosses Kenneth Lay and Jeffrey Skilling who are due to face criminal trial next month.

Richard Causey, former chief accountant at the bankrupt energy group, pleaded guilty to a single charge of securities fraud in exchange for a seven-year sentence.

The plea deal could prove pivotal in the most eagerly anticipated trial to emerge from the corporate scandals that gripped Wall Street in 2002. Mr. Causey had detailed knowledge of the financial workings at the company and will now help the prosecution to prepare its case against Mr. Lay and Mr. Skilling, former Enron chief executives. It was not clear whether he would also take the witness stand.

Corporate chicanery

Enron filed for bankruptcy at the end of 2001 amid allegations of accounting fraud. The company allegedly hid debts and inflated revenues and profits through complex off-balance sheet deals. The company, once the seventh largest in the U.S., has since become a byword for corporate chicanery.

Thousands of workers lost their jobs and investors lost billions of dollars. There was also political fall-out. Mr. Lay had been a close supporter of the Bush administration, advising the Government on energy policy, and was nicknamed ``Kenny boy'' by the President.

Mr. Causey (45) originally pleaded not guilty when he was charged with 34 counts of fraud, conspiracy, insider trading and other offences in January 2004. His sentence could be reduced to five years depending on his level of cooperation. Mr. Causey's testimony could prove crucial. The defence will attempt to portray former finance chief Andrew Fastow, who redirected millions of dollars from Enron into his own bank account over a number of years, as an unreliable witness.

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