Enron exec gets light sentence, 15 million dollar fine (Roundup)

Jun 18, 2007, 19:47 GMT

Washington - An Enron Corp unit's former chief executive received a light sentence Monday but was also ordered to pay a heavy fine of 15 million dollars to help compensate victims of the huge corporate collapse.

A federal judge in Houston sentenced Kenneth Rice to 27 months in prison for securities fraud linked to the energy-trading giant's 2001 bankruptcy, which exposed one of the biggest US corporate scandals.

He also ordered Rice to forfeit about 15 million dollars to be paid to victims of the collapse, who included employees and other shareholders, the US Justice Department said.

The sentence was relatively light compared to the 24 years in prison meted out to former Enron chief executive Jeffrey Skilling in October for his role in accounting fraud that brought down the company.

Enron collapsed less than three months after the September 11, 2001, terrorist attacks, jolting already shaken US financial markets and fuelling a government push to clean up corporate accounting practices.

The collapse of the former pipeline company that grew under Skilling's leadership into an energy-trading giant erased some 70 billion dollars in market value, cost at least 5,000 jobs and wiped out employee pensions.

Rice, former head of Enron Broadband Services (EBS), cooperated with the US government's investigation into Enron. He pleaded guilty to the fraud charge on July 20, 2004.

Rice admitted that he and others made falsely optimistic public statements about the company's fibre-optic technology and failed to disclose a likely operating loss in 2001, sharply boosting Enron's stock price, the Justice Department said.

Former chairman and CEO Kenneth Lay died in July 2006 at age 64, a few weeks after being convicted in the case. The conviction was dismissed after his death.

US prosecutors have brought criminal charges against 36 defendants in Enron's collapse, including 25 former Enron employees. Eighteen have pleaded guilty or were found guilty after trial.

A former pipeline company, Enron grew under Skilling's leadership into an energy-trading giant.

Lay and Skilling denied wrongdoing and blamed the scandal on former chief financial officer Andrew Fastow, who was sentenced to six years in prison last September after a plea-bargain with prosecutors.