Citigroup, the world's biggest bank, is being investigated over allegations that it helped the collapsed energy giant Enron hide its debts, according to US press reports.

Congressional investigators are investigating whether a series of previously undisclosed deals were used to dodge accounting rules, The New York Times and The Wall Street Journal reported.

The papers mentioned two deals - one called Bacchus, another Sundance - which investigators apparently suspect might have been structured in order to inflate Enron's profits.

Citigroup is to appear at a hearing on Wednesday before the Senate Permanent Subcommittee on Investigations on financing deals put together by Enron's banks, according to The New York Times.

Citigroup is expected to plead innocence and to insist the two deals were legal.

Dubious deals?

In the Bacchus deal, Citigroup is said to have made a $7.5m investment which helped Enron book a $200m sale of pulp and paper assets and $112m profits in 2000.

However, Citigroup's investment was met with an informal guarantee from and Enron executive, and as such it should be seen as a loan to Enron rather than as an investment by Citigroup, Senate investigators said according to the papers.

In the Sundance deal, an investment by Citigroup was said to have enabled Enron to keep its loss making commodity operations off its balance sheet, and thus away from investors' prying eyes.

Enron also achieved several hundreds of millions of dollars in tax deductions that would normally have been rejected, the newspapers reported.

The deductions were made thanks to a deal between Enron and Citigroup's competitor, JP Morgan Chase.