British Bankers Indicted Over Enron

Three former British bankers have been indicted on fraud charges by federal prosecutors in Texas, in connection with a scheme involving the bankrupt US energy company, Enron.

Gary Mulgrew, David Bermingham and Giles Darby are accused of stealing $7.3m (£4.6m) in the indictment filed yesterday in the southern Texas US district court.

Following charges first made in June, the formal indictment allows prosecutors to begin extradition proceedings to bring the men for trial in the US.

John Reynolds of the City law firm, Will & Emery, declined to comment on the latest development in the case against his three clients.

"We have not made any comment on the case and that remains our position," he said.

US prosecutors allege that the three Britons defrauded a former employer, Greenwich NatWest, with the help of Andrew Fastow, a former chief financial officer of Enron, and the chief target of government investigations.

The FBI says the three cheated Greenwich NatWest - an arm of NatWest based in Connecticut - by recommending the sale of a stake it owned in an Enron partnership controlled by Mr Fastow.

Shortly after the sale, Mr Fastow allegedly returned the ownership rights for that stake to the three men for $250,000. A few weeks later, they sold that interest for $7.3m, according to prosecutors.

The FBI's case is based on partnership documents, bank records, hotel and telephone records, transcripts of tape-recorded statements as well as a series of emails between the British bankers.

Prosecutors are believed to be using the case against the three as a way of building a case against Mr Fastow, the alleged mastermind behind Enron's accounting scams that obscured its status as a financial house of cards.

The Britons are also named in a suit against the Royal Bank of Canada, which they joined after Greenwich NatWest was taken over by the Royal Bank of Scotland in March 2000. The Dutch bank, Rabobank, accuses the Royal Bank of Canada of duping Rabobank into assuming a $500m loan to a company associated with Enron.

Mr Mulgrew is the son of the Labour MSP, Tricia Godman. His stepfather is Norman Godman, the former MP for Greenock. He lives in Halstead, Essex, where he is reported to have told friends he is an "unemployed househusband."

Mr Darby of Broxbourne, Hertfordshire, is now an executive with Bohan Engineering in Wiltshire and Mr Bermingham, who lives in Oxfordshire, is believed to be working in film finance.

The indictment against the former British bankers follows the August guilty plea of a former Enron chief executive, Michael Kopper, to conspiracy to engage in money laundering and wire fraud charges.

He was the first Enron executive to admit guilt in the government's investigation of Enron's collapse.

Enron filed for bankruptcy last December after it emerged that the company used partnerships to conceal its massive debts.

The collapse of what was once America's seventh-largest company sent shock waves through Wall Street and corporate America and contributed to a sharp sell-off in equities around the world.