Barclays cleared over Enron

Published on Saturday 22 July 2006 02:50

BARCLAYS said yesterday a US court had thrown out claims against the bank in a class-action lawsuit linked to the collapse of oil giant Enron.

The bank said it had received an order from the US district court for the southern district of Texas Houston dismissing the allegations.

According to a 67-page order published on Thursday, Enron shareholders had accused Barclays of helping "to create the appearance Enron was a creditworthy and financially successful company when nothing was further from the truth".

But Judge Melinda Harmon said: "The allegations at most portray Barclays as a culpable aider and abettor." The judge added that was not a basis for private civil liability.

Barclays, along with several other banks, including Royal Bank of Scotland, had been accused by shareholders of helping Enron misrepresent its earnings and revenues. Enron shareholders had filed a class action suit against Enron itself, its banks and several former top executives, claiming they had lost $40 billion (21.5bn) when the firm collapsed.

The so-called Newby litigation was brought after the energy firm was declared insolvent in 2001, triggering major losses for investors.

RBS was reported last weekend to be close to reaching a settlement of between 100 million and 200m with Enron investors, a suggestion that sources close to the bank said was wide of the mark both in terms of scale and timing.

Three British employees of National Westminster Bank, now part of RBS, were extradited to the United States this month and have pleaded not guilty to fraud charges relating to a deal with Enron.