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Enron defendants battle

Citigroup Inc, JP Morgan, Chase & Co and others sued over the collapse of Enron Corp face an important court deadline Wednesday in their effort to escape liability for US$34 billion in damages.

They have until Wednesday to file court papers to dismiss Enron shareholder and employee lawsuits before trial. Unless the banks and others persuade the judge handling the suits to drop them as defendants, plaintiffs' lawyers will get a green light to pore over company documents and e-mails.

That costly pre-trial process, known as "discovery," could implicate others that had dealings with the Houston-based energy trader, said Charles King III, a Houston lawyer for seven bank defendants, including Bank of America Corp and Credit Suisse First Boston.

"If they lose their motions to dismiss, then all the gloves come off," said Joel Strauss, a New York lawyer who represents some of the shareholder plaintiffs.

Discovery would complicate the legal agenda of Arthur Andersen LLP, Enron's former auditor. The fifth largest accounting firm was sued for contributing to the US$68 billion drop in market value that Enron suffered last year after revealing it had misstated income and debt through off-the-books partnerships.

The Chicago-based firm went on trial yesterday in Houston on federal obstruction of justice charges for destroying Enron documents of interest to federal investigators. The US Securities and Exchange Commission is also investigating possible civil violations.

Its business, which had revenue of US$9.34 billion in the fiscal year that ended Aug. 31, has lost about 250 clients this year because of Enron, which filed the largest bankruptcy in US history in December.

All defendants have denied any wrongdoing and declined to comment on how they will argue.
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