The Crime
According to the Statement of Facts which was signed by all three defendants as part of their eventual plea bargain, the Three realized in early 2000 that, because of rises in the stock prices of Enron and Rhythms, NatWest's interest in Swap Sub "had quite some value". On 22 February of that year, the three bankers made a presentation to Enron CFO Andrew Fastow suggesting ways in which this value could be captured; however, Fastow ultimately rejected this proposal.
Shortly afterwards, Fastow contacted Gary Mulgrew in late February or early March 2000 and offered to purchase NatWest's interest in Swap Sub. He also offered Mulgrew what is described in the Statement of Facts as "an unspecified financial opportunity" if he were to leave NatWest. Mulgrew discussed this conversation with Darby and Bermingham. On 6 March 2000, Fastow's assistant Michael Kopper contacted Darby with a formal proposal that a company Kopper controlled should purchase NatWest's stake in Swap Sub for $1 million. Mulgrew and Darby subsequently recommended to their superiors that NatWest should accept this offer.
Later that month, the three bankers learned that the "unspecified financial opportunity" which had been mentioned to Mulgrew involved their personally acquiring a portion of NatWest's stake in Swap Sub. In furtherance of this, Kopper set up a deal for the Three to acquire a put option on half of NatWest's former stake in the company. On 17 March, Darby collected the signatures needed to finalize the NatWest sale. On 20 March the Three executed the option agreement with Kopper. The Three concealed both their dealings with Fastow and Kopper, and the fact that they now had a financial interest in the company that bought Swap Sub, from their superiors at NatWest.
According to the Statement of Facts, the Three were unaware of the 22 March agreement to pay $30 million to Swap Sub. On 21 April 2000 Bermingham, who had resigned from NatWest in the meantime, exercised the options, resulting in a profit of more than $7 million. He subsequently split the proceeds with Darby and Mulgrew.
Read more about this topic: Nat West Three
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