Sign in to comment!

Menu
Home

Ex-Enron Head Skilling Faces Another Round of Questions

"I have not lied to Congress or anyone else," former Enron chief executive Jeffrey Skilling declared Tuesday in an appearance before the Senate Commerce Committee.

Skilling, who was at times combative, insisted he knew nothing about the manipulation of company books and denied misleading Congress. The former Enron head aggressively defended the actions he took while cashing in $66 million of company stock.

Several senators were openly skeptical.

"I don't believe you when you say you didn't know what was going on," said Barbara Boxer, D-Calif. She engaged Skilling in a heated exchange over his sale of Enron stock at time that he was urging employees to buy as much as possible.

He resigned last August about the time that an Enron vice president, Sherron Watkins, was warning chairman Kenneth Lay the company's financial dealings could cause it to "implode in a wave of accounting scandals."

The company collapsed in December in the biggest bankruptcy in U.S. history.

Watkins, sharing the witness table with Skilling for the first time, told Congress Tuesday that she believed he was aware of the problems posed by Enron's use of partnerships that were largely financed by company stock, contrary to normal accounting practices.

An internal Enron investigation has concluded that some of the partnerships, created by then-chief financial officer Andrew Fastow, had been used to hide debt and inflate the energy company's profits by more than $1 billion, misleading investors.

Sharply disputing Watkins' testimony earlier this month, Skilling denied he misleading Lay, the longtime Enron chairman who recently resigned. Lay has declined to testify. "I never duped Ken Lay," declared Skilling, using Watkins' wording.

Watkins characterized Lay in harsher terms than she had at the House hearing, when she painted a picture of a chairman largely out of the loop.

She said Tuesday that the investigation Lay ordered produced "a whitewashed report," and she said she felt "incredibly frustrated" when Lay failed to move aggressively to take actions to protect the company last October.

"I believe that Enron had a brief window to salvage itself ... and we missed that opportunity because of Mr. Lay's failure to recognize or accept that the company had manipulated its financial statements," said Watkins.

Millions of investors lost money, and thousands of current and former Enron employees lost the great bulk of their retirement savings when the company collapsed.

A dozen congressional committees, the Justice Department and the Securities and Exchange Commission are investigating the Enron bankruptcy.

Skilling criticized the congressional inquiry, and told the senators that "the framers of the Bill of Rights are watching," an apparent reference to the constitutional guarantees that a person is presumed innocent until proven guilty.

Quick to challenge senators' assertions, Skilling said he was aware of the partnerships but relied on assurances from Enron's accountants that the structures were proper. "I am not an accountant," he said, adding that he felt comfortable with the arrangements.

He disputed suggestions from several lawmakers that he had been warned of the precarious nature of Enron's partnerships and possible conflicts of interest.

Skilling said he was unaware that Fastow, who created some of the key partnerships, had made $30 million off them and that several other executives had enriched themselves by the off-the-books dealings.

"I believe Mr. Andy Fastow would not have put his hands in the Enron candy jar without an explicit or implicit approval to do so by Mr. Skilling," insisted Watkins.

Jeffrey McMahon, former treasurer of Enron Financial, related how he had sought Skilling's help to resolve a conflict involving Fastow, who was his boss, and the LJM partnership. McMahon was negotiating deals with LJM on behalf of Enron, but complained he found his role "untenable" because Fastow also headed the partnership.

A few weeks after the meeting, McMahon was replaced as treasurer by another executive, Ben Glisan -- a move Watkins described Tuesday as "letting the fox into the hen house" since Glisan secretly was an investor in the LJM partnership.

Skilling described his meeting with McMahon as largely over compensation and said that he met with Fastow "and put him on notice there was a complaint" and that the conflict issue had to be resolved.

Few senators bothered to hide their skepticism of Skilling's claim of innocence.

"I have great difficulty in believing your testimony," said Sen. Byron Dorgan, D-N.D., chairman of the subcommittee.

Dorgan said he was astounded that Skilling, a graduate of Harvard's business school, could one moment maneuver his way through an explanation of complex financial transactions but when pressed on questionable activities seemed "to lapse into utter confusion."

Boxer played a piece of a December 1999 videotape of an Enron meeting in which Skilling joined other executives in urging workers to put all their 401(k) retirement fund into Enron stock, when that year Skilling had sold 530,000 shares of Enron for nearly $22 million.

Skilling disputed the figure. But Boxer later produced Securities and Exchange Commission filings with his signature supporting the stock sales. In all, senators said Skilling sold $66 million worth of Enron stock between February 1999 and June 2001, shortly before he resigned from the company.

The Enron shares, once worth as much as $90 a share, are now virtually worthless.

Skilling said he still had the money from his stock sales, but that it was tied up by 36 lawsuits arising from the Enron bankruptcy — lawsuits he said he expected to spend the next five or 10 years battling.

The Associated Press contributed to this report.