Enron has agreed a settlement with Merrill Lynch under which the Wall Street bank will pay the bankrupt energy group $29.5m to settle fraud claims.
Enron filed for bankruptcy in 2001, sparking a US government probe of its off-the-books accounting and prosecutions of top executives for fraud. Its former chairman Kenneth Lay, convicted of fraud in May, died on Wednesday of an apparent heart attack. Enron has been trying to strike settlements with a number of banks.
Merrill, which helped Enron structure complex deals before its demise, has agreed to pay Enron to settle so-called 'Megaclaims' litigation. Under the deal, the banking giant has also agreed to drop $73.7m in claims it was pursuing against Enron, but the bank will receive $10m in claims.
Merrill Lynch did not admit liability of wrongdoing and both parties agreed to settle their litigation to avoid the costs and uncertainties of further proceedings, according to an Enron statement.
The statement said outstanding 'Megaclaims' cases involved Citigroup, Deutsche Bank, Barclays and Fleet National Bank. The settlement has to be approved by the US Bankruptcy Court for the Southern District of New York.
Following Enron's implosion, US lawmakers accused several Merrill Lynch bankers of aiding Enron in falsifying its financial results, a claim that was vigorously denied by the bank.
