“Using internal documents, e-mail messages and even a videotape as evidence, lawmakers on a Senate panel argued Tuesday that Merrill Lynch, one of the nation’s largest and most respected brokerage firms, repeatedly cut corners and compromised its business practices to win more investment-banking fees from Enron,” writes Richard Oppel in today’s New York Times.

“In one deal, in which Merrill acquired an interest in a Nigerian barge operation that allowed Enron to book a last-minute $12 million profit for 1999, a senior Merrill executive worried that the firm might ‘aid/abet’ the manipulation of Enron’s income statement, documents obtained by the Senate Permanent Subcommittee on Investigations show. Merrill said the executive’s concerns were resolved.”

“Committee investigators also said that a Merrill analyst, John Olson, was ousted from the firm in 1998 because Merrill was upset that his skeptical coverage of Enron was costing the firm millions of dollars in investment-banking revenue. A Merrill official testified Tuesday that it was common for companies to take research coverage into account in awarding investment-banking business, but he said Mr. Olson’s departure was ‘not in any way connected’ to his Enron research.”

” ‘Merrill Lynch helped Enron artificially and deceptively create revenue,’ Senator Carl Levin, the Michigan Democrat who is chairman of the panel, said Tuesday. ‘Enron couldn’t have engaged in the deceptions it did without help from a major financial institution,’ he said. ‘Merrill Lynch assisted Enron in cooking its books.’ “

“Defending Merrill at the four-hour hearing , G. Kelly Martin, the president of Merrill’s international private client division, testified that the firm ‘strongly believes that our limited dealings with Enron were appropriate and proper based on what we knew at the time.’

“At no time did we engage in transactions that we thought were improper,” he added.

“Two investment bankers who had played a role at Merrill in the deals that were scrutinized Tuesday, Schuyler Tilney and Robert Furst, both appeared today but declined to testify, invoking their Fifth Amendment right against self-incrimination and citing a pending Justice Department inquiry into one Merrill transaction with Enron. Mr. Tilney has been placed on paid leave by Merrill, where he is head of the firm’s energy investment-banking practice; Mr. Furst left Merrill last year.”

“Tuesday afternoon, Merrill’s two top executives, David H. Komansky, its chairman and chief executive, and Stanley O’Neal, its president, issued a statement that sought to reassure employees about Merrill’s conduct while also mildly criticizing the Senate panel. ‘The tenor of the subcommittee hearing reflected a disturbing skepticism and mistrust — not only of Merrill Lynch and our motives — but also of financial institutions and the business community generally,’ their statement said.”