Senator: Companies aided Enron `sham'

WASHINGTON - Citigroup Inc. and J.P. Morgan Chase & Co. knowingly aided Enron Corp. in hiding debt and avoiding taxes by using previously undisclosed "sham" transactions, the head of the Senate Permanent Subcommittee on Investigations said Monday.

The two financial institutions "helped Enron deceive the investing public as well as Enron employees and stockholders," Carl Levin, D-Mich., said in a statement outlining the issues to be explored during a hearing Wednesday. The companies used "sham contrivances ... to make Enron look more financially healthy than it really was, violating accounting standards."

Mr. Levin's subcommittee has been scrutinizing the factors that led to the Houston-based energy company's financial collapse since it filed for bankruptcy one year ago. In July, Citigroup and J.P. Morgan were criticized during another Enron hearing for allegedly doing too little to alert investors to Enron's condition.

But subcommittee investigators said the evidence now shows the two financial institutions actively aided Enron in falsely inflating earnings by about 11 percent in 2000.

Kmart to restate financial results

DETROIT - Kmart Corp. will restate its financial results for the past three fiscal years and the first two quarters of 2002 after problems were discovered as part of the company's review of its accounting practices. Kmart said Monday the adjustments will likely decrease its net loss for the first two quarters of this year by less than $100 million. For fiscal years 1999-2001, taken as a whole, it likely will have a negative effect on earnings by nearly $100 million.

Forecast: Advertisers to spend more in 2003

NEW YORK - U.S. advertising spending will rise 5 percent to $249.3 billion next year, helped by robust demand for television commercials and the end of a newspaper ad slump, said Robert Coen, head of forecasting at Universal McCann.

Mr. Coen also predicted 2002 ad spending will climb 2.6 percent, up from his June forecast for a 2.1 percent increase. Fueling the rise was TV advertising related to political campaigns and the broadcast of the Winter Olympics in February, Mr. Coen said at UBS Warburg's media conference in New York.

Treasury bill rates lowest since Nov. 12

WASHINGTON - Interest rates on short-term Treasury securities fell in Monday's auction. The Treasury Department sold $14 billion in three-month bills at a discount rate of 1.195 percent, down from 1.210 percent last week. An additional $15 billion was sold in six-month bills at a rate of 1.245 percent, down from 1.290 percent. Both rates were the lowest since Nov. 12.