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Rubin cleared in Enron scandal

Published: Friday, Jan. 3 2003 10:33 a.m. MST

WASHINGTON — A report by the staff of a Senate panel has concluded that Robert E. Rubin "did not act contrary to law" in the weeks before Enron collapsed by suggesting to the under secretary of the treasury that he urge major credit-rating agencies to delay issuing a downgrade of Enron.

Rubin, who resigned as treasury secretary in July 1999 and several months later became chairman of Citigroup's executive committee, called Peter R. Fisher, the under secretary of the treasury, on Nov. 8, 2001, after learning that Enron was close to losing its investment-grade rating.

Citigroup stood to lose more than $1 billion that it had lent to Enron if its credit rating was downgraded and the company subsequently collapsed. Rubin had been asked to make the call by the head of Citigroup's investment banking unit at the time, Michael A. Carpenter, according to the staff report by the Senate Governmental Affairs Committee.

After news reports surfaced last year detailing Rubin's phone call, some Republicans in Congress demanded that his actions be investigated, suggesting that his contact with Fisher was an attempt to pressure his former agency to improperly help Citigroup avoid a huge loss from its exposure to Enron.

The staff report, which was expected to be released today, says that "it does not appear that Rubin violated any laws or regulations in contacting Fisher and proposing that the Treasury Department contact a credit rating agency in connection with Enron's rating."

Rubin remains a leading Democratic figure, and his phone call to Fisher was a sensitive issue for Democrats in Congress, including the departing committee chairman, Sen. Joseph I. Lieberman of Connecticut. Any revelations about any improper conduct by Rubin would also have been an embarrassment for Democrats at a time when they were seeking to use the Republican Party's ties to Enron as an election-year issue.

On Wednesday night, a senior Republican staff member on the committee said, "The report accurately reflects the conclusions that the bipartisan committee staff drew from its investigation."

Still, the report's findings may prompt criticism from Republicans who have suggested that the phone call was inappropriate and questioned why Senate Democrats sought to investigate White House links to Enron but not examine Rubin's actions more closely.

One Republican senator, Peter G. Fitzgerald of Illinois, demanded in July that the panel examine the actions of Rubin and other Citigroup officials, in light of the committee's "desire to determine to what extent Enron and its agents may have attempted to influence government officials and other oversight authorities."

"Any attempt," Fitzgerald wrote, "to influence or pressure a credit-rating agency, or to encourage government officials to do so, particularly by a creditor such as Citigroup, with a financial interest in the agency's determinations, is potentially troublesome."

On Thursday night, a spokeswoman for Rubin said, "This bipartisan report concludes there was nothing improper about this call, and it should put the matter to rest."

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