Posted on 02/15/2006 1:45:38 AM PST by primeval patriot
The former head of Enron's broadband business told jurors Tuesday that his mentor and friend Jeff Skilling pressured him to make his division appear to the public to be growing, even while the unit was in fact laying people off and had no revenues.
Ken Rice, a 47-year-old Houstonian, said he repeatedly misled investors about the financial health of the company's Internet business. And he walked the jury through a March 2001 analyst conference call in which he said Skilling also repeatedly misrepresented the faltering division's health.
On questioning by Enron Task Force Director Sean Berkowitz, Rice painted a picture of a pressure-cooker business with a major focus on maintaining the public face of a growing company so that Wall Street investors would bump up the stock price based on hopes for the future.
Rice said Skilling in particular worried the market would drop the price if Enron appeared to be primarily just a risk-taking trading company.
The second witness to take the stand in this case, Rice said he was expected to engage in all sorts of financial contortions to meet the earnings expectations assigned to his division, even though his two alleged revenue-generating businesses weren't generating anything.
"Mr. Skilling would simply say, in fact he did say, 'This is the number, this is what the number is going to be,' " Rice said of the earnings estimate predictions. Rice's testimony focused on Skilling, who he said was a hands-on boss who understood what was happening at Enron Broadband Services.
While Rice testified, Skilling sat at the nearby defense table. Though his co-defendant, former Chairman Ken Lay , often took notes, Skilling generally just folded his hands on his crossed legs. Occasionally the two defendants would catch each other's eye, once even sharing a small laugh.
Rice said the EBS division sometimes resorted to using then-CFO Andrew Fastow's side companies for several deals that helped him bolster earnings, though the bottom line was still negative. Skilling encouraged using Fastow's side companies, Rice said.
Enron, Global Crossing, World Com, the high tech stock bubble, are all examples of Clinton's robust economy. They are also a reresentation of Clinton himself - lots of hype and empty promises.
Fastow was an outright thief. He inflated Enron's earnings by hiding billions in debt and losses in off-book partnerships.
Fastow made millions for himself by slippery accounting maneuvers, which effectively hid debt by moving it off Enron's balance sheet.
There were a lot of Enron people complaining about Fastow's partnerships, and the amount of money Fastow was making off the books---and putting it into his "family foundation." From there, God knows where it went. Can you say money-laundering?
The fraud led to the collapse of what was once the seventh-largest U.S. company by sales.
Fastow has pleaded guilty to a fraud charge stemming from Enron's collapse and faces 10 years in prison.
Fastow's wife went to jail---pleading guilty to tax fraud.
Defense lawyers have described Fastow as a crook who "hid" his activities from Skilling and Lay and the company's board of directors.
Duh.
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