---
title: "Enron and LJM: Fastow’s dual role, investor vehicles and governance limits"
language: en
canonical: https://dossiertwist.com/dossiers/enron/ljm-partnerships/
as_of: 2026-10-08
keywords: ["Enron","LJM","Chewco","Raptor","bankruptcy","corporate governance","structured finance","legal outcomes"]
---

# Enron and LJM: Fastow’s dual role, investor vehicles and governance limits

**Question.** Who controlled LJM, and why was its relationship with Enron problematic?

**Answer.** LJM1 and LJM2 were partnerships managed through Fastow-controlled entities while he served as Enron CFO. Board exceptions, investor removal rights and shared staff complicate the distinction between legal structure and economic independence.

## Two partnerships and two chains of control

- Analysis: LJM1 began in June 1999. Fastow controlled LJM Partners LLC, the general partner of LJM Partners LP, which in turn was LJM1’s general partner. ERNB and Campsie supplied $7.5 million each as direct limited partners. The report associates them with CSFB and NatWest, but those banking-group connections should not replace the named legal vehicles in the ownership chain. [s-d117]
- Attributed: LJM Cayman, L.P. (LJM1) was formed in June 1999. Fastow was sole managing member of LJM Partners LLC, which was general partner of LJM Partners LP; that partnership was general partner of LJM1. ERNB Ltd and Campsie Ltd were LJM1 limited partners, associated in the report with CSFB and NatWest. [s-d117]
  - Qualification: Each outside limited partner contributed $7.5 million. The named vehicles, rather than the banking groups automatically, are the direct limited partners. Fastow also held the limited-partner interest in LJM Partners LP.
- Analysis: LJM2 followed in October with a separate general-partner chain: LJM2 Capital Management LP and its general partner, LJM2 Capital Management LLC. Fastow managed the LLC and held a limited interest in the LP alongside Kopper-managed Big Doe. The committee reported about fifty investors and $394 million in commitments, while warning that LJM2 had not supplied its records. Its list includes institutional investors and bank-affiliated entities; it does not establish a complete direct-investor or beneficial-ownership table. [s-d117]
- Attributed: LJM2 Co-Investment LP was formed in October 1999 with LJM2 Capital Management LP as general partner. Its general partner was LJM2 Capital Management LLC, managed by Fastow; its limited partners were Fastow and Big Doe LLC, managed by Kopper. [s-d117]
  - Qualification: The committee reported about fifty limited partners and $394 million aggregate commitments but lacked cooperation needed to verify the complete roster. A commitment is not proof that the entire amount was contributed.
- Attributed: The committee identified American Home Assurance, Arkansas Teachers Retirement System and the MacArthur Foundation, together with entities affiliated with Merrill Lynch, J.P. Morgan, Citicorp, First Union, Deutsche Bank, G.E. Capital and Dresdner Kleinwort Benson, among LJM2’s reported investors. [s-d117]
  - Qualification: The banking-group associations do not identify each direct legal subscription vehicle. The incomplete roster should not be treated as a complete beneficial-ownership table.

## The conflict was known; the controls had limits

- Analysis: The board authorised Fastow’s participation despite the tension between his duty as CFO and his partnership interests. Causey and Buy were to approve LJM2 transactions, and the audit committee was to review them annually. The fundraising document marketed Fastow’s access to Enron opportunities. Its inclusion of Glisan among day-to-day managers was disputed by Glisan, so it is not treated here as an uncontested appointment. [s-d117]
- Attributed: The board authorised Fastow’s LJM roles despite the CFO conflict. LJM2 transactions were to receive Causey and Buy’s approval, with annual audit-committee review. The placement memorandum promoted access to Enron opportunities and named Fastow, Kopper and Glisan in management. [s-d117]
  - Qualification: Glisan told the committee that his inclusion in the placement memorandum was a mistake. It is therefore not used as an unqualified LJM management appointment.
- Analysis: Formal separation did not eliminate operational overlap. Services agreements used Enron staff for administrative and investment tasks, with LJM paying compensation or allocated costs. The inquiry could not establish what was actually paid. At the same time, limited partners had investment-approval and removal rights. The committee therefore found no clear answer on consolidation based on managerial control alone. Kopper’s acquisition of Fastow’s interest in July 2001 also means the ownership picture changed over time. [s-d117]
- Attributed: Enron and LJM Management LP agreed in April and July 2000 that Enron staff would provide administrative and transaction services, with compensation and costs allocated between the parties. The inquiry could not determine what LJM2 actually paid. [s-d117]
  - Qualification: Kopper, Lynn and Yaeger Patel were identified as staff working for LJM while receiving compensation from Enron and LJM. The agreement describes services, not a complete corporate ownership chain.
- Attributed: The report regarded Fastow as the effective general partner but found no clear accounting answer on consolidation solely from control: partnership agreements limited investment authority and gave limited partners removal rights, strengthened during 2000. Kopper bought Fastow’s LJM2 interest after leaving Enron in July 2001. [s-d117]
  - Qualification: Managerial control, legal ownership and the accounting consolidation test must remain distinct. The committee did not establish the complete investor governance record. The surrounding account places Fastow’s interests in the general-partner chain; the abbreviated purchase description does not establish a direct LJM2 limited-partner stake held by Kopper.

## The inquiry’s limits are part of its evidence

- Analysis: The Powers report was a private inquiry, not a judgment obtained after compulsory discovery and trial. It lacked complete emails, workpapers and participation by several principal actors. Powers and Troubh alone assessed the board’s conduct; Troubh and Winokur alone assessed Vinson & Elkins. These limits matter when the report identifies deficiencies or describes disputed recollections. Multiple copies in the archive remain copies of the same investigation. [s-d117]
- Attributed: The Powers investigation was a private internal inquiry by William Powers, Raymond Troubh and Herbert Winokur, assisted by legal and accounting advisers. It lacked compulsory powers and did not obtain all relevant emails, Andersen workpapers or cooperation from the LJM partnerships and several central participants. [s-d117]
  - Qualification: Board and committee assessments were solely Powers and Troubh’s views; assessments of Vinson & Elkins were solely Troubh and Winokur’s. Multiple retained copies reproduce one report, not independent corroboration.

## The partnership’s own creditor dispute

- Analysis: LJM2’s failure generated its own litigation. Creditors invoked a $47 million call, investors replaced the general partner and attempted to stop further calls, and the liquidating trust later sought $75 million. The 2004 Delaware decision allowed the claim past a motion to dismiss; it did not award those amounts. A separate 2003 remand returned a management dispute to Chancery without resolving the alleged misconduct. These proceedings should not be confused with Enron investors’ claims or an individual criminal conviction. [s-d25] [s-d122]
- Documented: After LJM2 defaulted, its creditors invoked a $47 million capital call in December 2001. Limited partners replaced the general partner with Partnership Services and sought to cancel the call. Following LJM2’s own bankruptcy, liquidating Trust B, managed by Edward N. Meyer for bank creditors, made a further $75 million call. In December 2004 the Delaware court denied the limited partners’ motion to dismiss the resulting action. [s-d25]
  - Qualification: This was a pleading-stage decision, not a judgment collecting the full requested amounts. The original $120 million credit facility, $47 million call and later $75 million call are distinct measures and must not be summed as an Enron loss.
- Documented: The federal Delaware court remanded LJM2’s dispute with former general partner LJM2 Capital Management to Chancery and denied transfer in February 2003. It recorded the prior replacement by Partnership Services and competing claims over the partnership’s management. [s-d122]
  - Qualification: Remand decided the forum, not the merits of the competing contract, loyalty, conversion or self-dealing allegations.

## Sources

- [s-d117] Company statement source · s-d117
- [s-d25] Court record source · s-d25
- [s-d122] Court record source · s-d122