Britons on £5m Enron charge

THREE high-living British merchant bankers, formerly employed by NatWest, have been accused of fraud in the first individual charges to be brought in the Enron scandal.

The trio, who were led by the son of a member of the Scottish Parliament, are accused of skimming £5m from a partnership linked to Enron, the massive US energy group which collapsed last year.

The charges have been brought in Houston, Texas, by the US Justice Department against Gary Mulgrew, Giles Darby and David Bermingham.

US prosecutors say they secretly invested in an Enron off-the-books partnership and siphoned off income that 'rightfully belonged to their employer'.

At the time, they were employees of Greenwich NatWest, the merchant banking boutique of National Westminster, now part of Royal Bank of Scotland.

Mulgrew, 40, is the son of Tricia Godman, a member of the Scottish Parliament, and stepson of Norman Godman, the former MP for Greenock and Inverclyde. He, Darby and Bermingham lived a lavish lifestyle on the back of fees earned from their close relationship with senior Enron executives in Houston.

Late last week, the three were named in a £340m civil lawsuit brought by the Dutch bank Rabobank against the Royal Bank of Canada, which employed them after they left Greenwich NatWest until November last year. The three all live in large houses in southern England.

Lawyers speculated that the Justice Department will use the criminal charges to put pressure on the three to help US officials unravel Enron's tangled web of financial deals. They were close to Enron chief financial officer Andrew Fastow, who ran several of the controversial partnerships that hid Enron's debt and led to its downfall.

It is not uncommon for the Justice Department first to bring charges at the edges of an investigation to aid evidence-gathering to build a stronger central case.

In the civil suit, the three were accused of participating in 'the deliberate looting of Enron assets'. Rabobank, which filed suit against the Royal Bank of Canada (RBC) in New York state court last Friday, said the trio knew about Enron's fragility because of their previous work for the group while at Greenwich NatWest. 'Their knowledge of Enron from their days at NatWest, is a crucial aspect of the case,' Rabobank said, accusing them of ' enticing' Rabobank into signing up for a lossmaking transaction. RBC emphatically denied any wrongdoing.

Britain's Serious Fraud Office helped with the investigation that led to last night's charges in Houston, the US Justice Department said.

A spokesman for NatWest's owners, the Royal Bank of Scotland said: 'We have looked into the conduct of Greenwich NatWest during the time of its relationship with Enron and are satisfied that Greenwich NatWest acted properly.'

High-living truth stranger than fiction