WASHINGTON – Former Enron CEO Jeffrey Skilling, who resigned suddenly from his post last summer, four months before his company declared bankruptcy, said Enron was financially healthy when he departed.
Back in August, when he resigned his post, "I did not believe the company was in any financial peril," Skilling said, testifying under tough questioning in his first public accounting of the collapse. "I absolutely, unequivocally thought the company was in good shape."
Skilling told a House panel that he had no idea his fellow executives were creating partnerships in order to conceal the company's debt — and taking management fees to boot.
"It was my understanding that the purpose of the transactions was to provide a real hedge," to lock in profits from technology investments, he said.
But his words came in direct conflict with another witness at the House Energy and Commerce Committee's Oversight and Investigations Subcommittee hearing into the collapse of what was once the nation's seventh-largest firm.
Current Enron president and Chief Operating Officer Jeffrey McMahon said Skilling transferred him to a new job shortly after he complained to Skilling about the company's financial dealings in March 2000.
"His parting words to me were he understood all my concerns and he would remedy the situation," said McMahon, who was treasurer at the time.
Likening Enron executives' activities to a conversation between Don Corleone and his consigliere in The Godfather, Rep. Peter Deutsch concurred that "you can always steal more with a briefcase than with a gun."
Deutsch, D-Fla., was one of more than a dozen lawmakers who opened the hearing Thursday with statements accusing Enron's executives of bilking thousands of shareholders of billions of dollars. Other phrases used to describe Enron's top officials were "corporate thieves," "business cowboys," and "economic terrorists."
Describing the pattern in which Enron officials put Enron stocks into partnerships and then took management fees from each new company, Deutsch said the maneuvering, "wasn't just smart. It wasn't just around the edges. It was, in fact, fraud."
Lawmakers agreed that there may be few good officers at Enron, and attentively listened to Enron executive Jordan Mintz, who testified that he tried to limit the number of off-the-books partnerships the energy trading firm was creating because he was concerned about their legitimacy.
Mintz raised questions with two top Enron executives late in 2000, after he became general counsel for Global Finance.
Those executives, Chief Accounting Officer Richard Causey and Chief Risk Officer Richard Buy, refused to testify Thursday, invoking their Fifth Amendment rights against self-incrimination.
Chief Financial Officer Andrew Fastow, who made at least $30 million in running several of the partnerships, and Enron Global Finances executive Michael Kopper, who got at least $10 million, also invoked their Fifth Amendment rights.
Mintz said that Skilling, who resigned in August citing personal reasons, seemed to reject interfering with Fastow's management of the partnership companies, despite the obvious conflict of interest in having Fastow run the partnerships while being the chief financial officer for the energy giant.
Mintz said Cliff Baxter, the Enron executive who recently committed suicide, complained to Mintz about Skilling, saying that he didn't understand why Skilling wasn't reining in Fastow.
Congressional investigators are interested in how Fastow and other executives were able to turn such large profits from companies whose only assets were their Enron stocks. For instance, a family foundation run by Fastow turned $25,000 into $4.5 million over a two-month period. Kopper saw an investment of $125,000 become $10.5 million in less than three years.
Lesser players, brought into the network of transactions by Fastow and Kopper, earned $500,000 to $1 million from investments of less than $5,800.
"This collapse was not brought about by isolated acts of rogue employees. It required the complicity of far more than a few bad apples," said Rep. James Greenwood, R-Pa., chairman of the committee said.
"The simple story is old-fashioned theft," said Rep. Billy Tauzin, R-La., chairman of the committee.
Across the Capitol, former Enron employees told senators about their feelings of anger, shock and sadness as they watched their company fall into bankruptcy, and they demanded that former Enron chairman Kenneth Lay and other top executives be held liable for workers' losses.
"I now understand why people jumped out of windows during the Great Depression," Steven E. Lacey said in prepared testimony to a Senate committee.
A dozen congressional committees are investigating the Houston-based energy-trading company, as are the Securities and Exchange Commission and the Justice Department.
In the wake of the Dec. 2 collapse, President Bush has also called for pension reforms that would give employees more information about their stock holdings, and would raise the accountability of companies that put restrictions on the sales of company stocks.
An internal review of Enron conducted by University of Texas law school dean William Powers found that Skilling personally supported the board of director's decision to permit Fastow to proceed with the partnerships.
"It is difficult to understand why Skilling did not ensure that ... controls were rigorously adhered to and enforced," Powers' review said.
"Based upon his own description of events, Skilling does not appear to have given much attention to these duties," the report added. "Skilling, who prides himself on the controls he put in place in many areas at Enron, bears substantial responsibility for the failure of the system of internal controls."
Skilling said at the hearing that he is not a control freak, but a controls freak, and that he didn't personally approve of one partnership because it already had the backing of six other executives.
The Associated Press contributed to this report.