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JP Morgan agrees to pay US$1 billion in Enron settlement

JP Morgan Chase agreed on Tuesday to pay US$1 billion to settle claims brought against it by Enron, bringing the total cost of the Wall Street bank's brush with the notorious energy firm to US$3.2 billion.

The latest settlement will put further pressure on the banks against which Enron has an outstanding claim.

Enron filed suit against 10 banks, accusing them of helping the energy firm's former management to commit fraud. Enron filed for bankruptcy in December 2001 amid allegations that it routinely hid debts and inflated revenues and earnings through a series of complex off-balance sheet deals.

Almost four years later, it continues to cast a long shadow over both the finances and the reputation of Wall Street.

JP Morgan agreed to pay US$350 million in cash and to forego certain claims in Enron's bankruptcy proceedings, bringing the settlement to around US$1 billion.

"We have put behind us another significant piece of our Enron exposure," the bank's chief executive William Harrison said.

The firm agreed in June to pay US$2.2 billion to settle a class action lawsuit filed by former investors in Enron.

The Toronto Dominion Bank also announced a settlement with Enron on Tuesday and said it would pay US$70 million to resolve the allegations that it helped the company commit fraud.

Enron has now recovered about US$735 million in cash in what it calls its "mega-claims" litigation. In earlier settlements, Royal Bank of Scotland agreed to pay US$41.8 million, Canadian Imperial Bank of Commerce will pay US$250 million and Royal Bank of Canada will pay US$25 million.

"These are tremendous results for creditors and they will certainly add to their distributions," said John Ray, Enron's board chairman.

He said talks were ongoing with the five banks that have not settled and that the latest agreements "give us momentum."
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