Remorseful former Enron CFO receives reduced sentence

In late September, disgraced former Enron chief financial officer Andrew Fastow was sentenced to six years in prison for overseeing fraudulent off-balance-sheet dealings that brought down the company and made him millions.

But the judge in Houston, Texas, Ken Hoyt, did not hand down the maximum 10-year term on the grounds that Fastow had shown remorse and co-operated with government officials.

In 2004, Fastow had agreed to serve as long as 10 years in exchange for testifying against the former top executives of the energy company, which has now become synonymous with corporate accounting scandals and fraud.

Evidence provided by Fastow helped secure the convictions for conspiracy and fraud of Enron’s founder, Kenneth Lay, and the former chief executive Jeffrey Skilling. Hoyt described Fastow as having been "drunk on the wine of greed" but acknowledged that the former chief financial officer had demonstrated remorse by fully co-operating.

"These factors call for mercy," the judge said. Fastow has accused 10 leading investment banks of helping Enron falsify its accounts in return for lucrative advisory fees. The accusations are made in a 24-page legal declaration filed by Fastow in support of a class action lawsuit against the banks brought on behalf of Enron’s shareholders.

In his statement, Fastow said he viewed the banks as well-paid "problem-solvers" who knowingly helped Enron create fictitious financial structures that made the company appear far more profitable than it really was.

Attorneys for Enron shareholders, led by Lerach Coughlin, have already won $8 billion in settlements from a group of banks that includes Citigroup, Bank of America and JP Morgan.