Former Enron chief executive Jeffrey Skilling, whose testimony has been challenged by lawmakers, faces questioning before a skeptical Congress again Tuesday — this time along with other Enron officials whose versions of events conflict with his.
Sherron Watkins, the vice president who warned former chairman Kenneth Lay in August of potentially serious accounting problems, is testifying at the same time as Skilling — who has stated he knew few details of questionable transactions involving partnerships used to hide more than $1 billion in debt.
Lawmakers want to bring together Skilling, Watkins and Jeffrey McMahon, Enron's current president and chief operating officer to put the same questions to each of them and compare their answers at a hearing of the Senate Commerce Committee.
The three are sharing the same witness table but it was clear Monday that Skilling and Watkins view events through different prisms.
Bruce Hiler, Skilling's lawyer, said, "We specifically requested Mr. Skilling be on the same panel with Sherron Watkins. He is looking forward to what will be Mr. Skilling's first specific conversation with Ms. Watkins about these matters."
Retorted Watkins' attorney, Philip Hilder: "Mr. Skilling ought to know that this is a congressional hearing, not a conversation with Sherron Watkins, and he needs to answer the questions and have the conversation with the congressional committee."
All three testified, separately and under oath, this month before a House investigative panel. Other top Enron executives, including Lay, have invoked their Fifth Amendment right against potential self-incrimination and refused to testify.
Lay told Enron employees at a meeting last Oct. 23 that the partnerships were a mistake but he did not blame chief financial officer Andrew Fastow, who ran them, a videotape made public Monday by Rep. Henry Waxman, D-Calif., shows. The company had recently disclosed a third-quarter loss of more than $600 million and federal regulators had opened an inquiry into its accounting.
"I and the board are also sure that Andy has operated in the most ethical and appropriate manner possible," Lay is seen saying on the tape. The next day, Fastow was fired.
Asked by employees about the $30 million or so Fastow made running the partnerships, Lay asked rhetorically whether Fastow and his partners would get to keep the money or find another place for it. "What he does with that money is his own business," Lay said.
"We are determined to understand what happened at the Enron Corp.," said Sen. Byron Dorgan, D-N.D., whose Commerce subcommittee on consumer affairs is investigating the energy-trading company's collapse and bankruptcy, the biggest in U.S. history. "We're trying to search for the truth here," Dorgan said in a telephone interview. "I think it will be helpful ... to compare responses" of the three witnesses.
Watkins told the House panel on Feb. 14 that she believed Skilling and Fastow — along with Enron's auditing firm, Arthur Andersen LLP, and its outside legal advisers — "did dupe Ken Lay and the board."
She called Skilling "a very intense, hands-on manager" and said she "would find it hard to believe that he was not fully aware" that the partnerships run by Fastow were largely financed by Enron stock, contrary to normal accounting practices.
A week earlier, before the same subcommittee, Skilling testified that he was assured by others at Enron that the transactions "were correct."
According to McMahon's Feb. 7 testimony, he was transferred out of his job as treasurer shortly after he complained to Skilling about the partnerships in a meeting on March 16, 2000.
Skilling has said he couldn't recall details of key conversations that subordinates, including McMahon, testified they had with him concerning Enron's finances.
In a related move Monday, Waxman wrote Skilling requesting information on his saying at an Enron employee meeting on Oct. 3, 2000, that the company's accounting practices were "conservatively executed" and brushing off a newspaper report describing possible accounting problems.
Waxman, the senior Democrat on the House Government Reform Committee, said Skilling was seen making the statements on another videotape received last week from Enron.
Hiler, in a statement, called Waxman's inquiry an "attempt to draw unsubstantiated conclusions from [a] new piece of information."