Man Without Qualities

Wednesday, July 24, 2002

Robert Rubin and the Federal False Statement Act II

With respect to the post below captioned "Robert Rubin and the Federal False Statement Act", Alex Frantz says "There is one trivial detail that's been omitted from this discussion of Mr Rubin's crimes: neither Musil nor Glenn provides a single example of a statement Rubin made that they believe to have been false."

Fair enough.

That post is separated by several others from an earlier one captioned "Butter Won't Melt In His Mouth," which in turn links to eight other posts in which the Man Without Qualities has expressed reasons to be concerned about Mr. Rubin's role and truthfulness in the Enron/Citigroup matter. Unless Mr. Frantz has been reading this blog consistently recently, he might easily have missed the earlier collection of links.

Andrew Sullivan has his own suspicions, which should be investigated. But whether or not Mr. Rubin was at Citigroup when certain Enron deals were put together, he was certainly there when Enron crashed and he made his call to Mr. Fisher. There is no indication in the media that Mr. Rubin mentioned any of Citigroup's questionable involvement with Enron when he requested Mr. Fisher's aid in pressuring the rating agencies. If Mr. Rubin knew about Citigroup's involvement at the time he called Mr. Fisher, Mr. Rubin may have misled Mr. Fisher in violation of the False Statement Act. Mr. Rubin is also reported to have spoken to various federal officials since making that call. But there are no reports that Mr. Rubin detailed Citigroup's deeper involvement, or any of the troubling deals that have recently surfaced. But Mr. Rubin does have a deep and justified reputation for acquiring vast information before taking important actions such as his call to Mr. Fisher and subsequent interviews with government investigators, and he does not move carelessly. There is therefore very good reason to ask "What did Mr. Rubin know about Enron and Citigroup's relationship with Enron when he spoke to Mr. Fisher and other government officials, and did he mislead them?"

For example, media reports imply that when Mr. Rubin requested Mr.Fisher's intervention Mr. Rubin suggested that a delay in a downgrade of Enron's debt might permit the company to get back on its feet. But the Citigroup transactions and involvement that have come to light recently indicate that Citigroup may have known Enron was doomed and was cooking its books with Citigroup help. The details of the Rubin-Fisher call have not been fuly disclosed. But if Mr. Rubin knew Enron was doomed but said otherwise to Mr. Fisher in an attempt to manipulate the rating agencies, that would be a very serious matter, not just a technical violation of the False Statements Act. And at this point, it looks like that may be just what happened. But we don't know exactly what Mr. Rubin said or knew when he called Mr. Fisher. Similarly, we don't know most of what Mr. Rubin said or knew when he thereafter talked privately to federal investigators about his call Mr. Fisher and Enron, or how it squares with the recent disclosures of the Citigroup/Enron relationship. But we know that Mr. Rubin was in a position to know a lot, and that he has a reputation for making sure he is fully informed when he acts. But we have no reports from Mr. Rubin, Citigroup or anyone else that he revealed any key transactions to the federal agents to whom he has spoken.

Mr. Frantz is quite correct that the matter has not yet come to the point of identifying a particular supposedly false statement of Mr. Rubin to a particular government official. And I have not suggested the matter has come to that point. What I have suggested is that Mr. Rubin should be investigated. I have not accused Mr. Rubin of any crime, nor has Glenn, nor has Mr. Frantz said that either of us have.

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