Former Enron CEO Jeff Skilling Says He Knew of Nothing Wrong at the Company
By PETE YOST
Associated Press Writer
Thursday February 7, 3:47 pm Eastern Time
WASHINGTON (AP) -- Former Enron chief executive officer Jeff Skilling told Congress on Thursday that he knew of nothing improper about the complex web of partnerships that brought the energy trading giant down.
When he resigned his post in August, ``I did not believe the company was in any financial peril,'' Skilling said in his first public testimony about the collapse.
And the company's financial statements, ``as far as I knew, accurately reflected'' Enron's condition, Skilling told the House Commerce oversight and investigations subcommittee.
Skilling said he had no knowledge that the partnerships run by his long-time colleague Andrew Fastow were designed to conceal losses.
``It was my understanding that the purpose of the transactions was to provide a real hedge'' -- locking in profits from technology investments, the former CEO said.
Skilling's testimony came as Fastow and three other current and former Enron executives exercised their Fifth Amendment right not to testify at the House hearing.
In contrast to Skilling's testimony, Enron's new chief operating officer, Jeffrey McMahon, said earlier Thursday that he was transferred to a new job shortly after he complained to Skilling about the obscure partnerships in a 30-minute meeting in March 2000. McMahon was treasurer at the time of the meeting.
``His parting words to me were he understood all my concerns and he would remedy the situation,'' McMahon told the subcommittee. McMahon said Skilling called shortly after the meeting and offered him a job elsewhere in the company.
McMahon was named Enron's president and chief operating officer last week.
His testimony followed the refusal by Fastow and ex-executive Michael Kopper to testify. The two are at the center of the partnerships which kept hundreds of millions of dollars in Enron debt off the company's books.
``On the advice of my counsel I respectfully decline to answer the questions,'' said Fastow.
After telling the committee that would be his answer to all questions posed by the panel, Fastow was dismissed.
Kopper also invoked the constitutional protection against self-incrimination. Kopper saw an investment of $125,000 become $10.5 million in less than three years.
After Kopper departed, two current Enron executives, Richard Buy and Richard Causey, also declined to answer questions. Both had knowledge of the partnerships that Fastow and Kopper ran.
McMahon and ex-Enron attorney Jordan Mintz testified they were concerned about conflicts of interest arising out of Fastow's financial interests in the partnerships while he was Enron's chief financial officer.
Mintz suggested that the close relationship between Skilling and Fastow was an obstacle to bringing the partnerships under control.
According to McMahon, Fastow said ``everything Mr. Skilling says, I hear about.''
And Mintz said that Buy -- one of the executives who took the Fifth -- told me ``Jeff is very fond of Andy,'' signifying that Skilling would not do anything about Fastow's partnership.
According to Mintz, Skilling ignored Mintz's repeated requests to meet about the partnerships.
``You tried,'' Mintz said he was told by Causey and Buy.
Mintz said that Fastow left an expletive-laced voice mail for an attorney who Fastow wanted Mintz to fire. The attorney was taking a hard line in negotiations with Fastow's partnership.
Mintz said Cliff Baxter, the Enron executive who recently committed suicide, said over lunch one day that ``he didn't understand why the board was allowing Andy to do this'' by running partnerships. Baxter also complained to Skilling.
Fastow and Kopper collected $40 million for their role in the partnerships -- which investigators say involved self-dealing and conflicts of interest that eventually lead to the energy trading company's collapse.
Fastow was sworn in by Rep. Jim Greenwood, chairman of the House Energy and Commerce oversight and investigations subcommittee. Greenwood was rebuffed when he asked the witness two questions about his handling of company partnerships that hid hundreds of millions of dollars in Enron debt.
``You enriched yourself by tens of millions of dollars'' through deals ``with your own company,'' Greenwood said to him.
As the four current and former Enron executives sat silently in the crowded hearing room, lawmakers called those who drove the company into bankruptcy, ``economic terrorists,'' ``business cowboys'' and ``corporate thieves.''
``This collapse was not brought about by isolated acts of rogue employees. It required the complicity of far more than a few bad apples,'' Greenwood said as he opened Thursday's hearing.
``Was the selling of your morals ... of your souls, worth it?'' asked Rep. Bobby Rush, D-Ill., who said ``millions of dreams'' of people who lost retirement money were ruined by the Enron crash.
Arthur Andersen auditor David Duncan also has invoked his Fifth Amendment rights and refused to testify before Congress. Duncan was fired last month for his role in the shredding of Enron-related documents.
Mintz raised questions with Buy, the chief risk officer, and Causey, the chief accounting officer, about how the partnerships were being handled late in 2000, shortly after becoming general counsel for Enron Global Finance.
In memos, Mintz insisted Skilling sign off on one partnership arrangement before it could proceed. Six people signed an approval sheet, but the line next to Skilling's typed name is blank. Causey and Buy were among those who signed.
Skilling's lawyers said his approval wasn't required.
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Who's Skilling trying to fool...?? He's taking a huge risk by testifying and I'm sure the Justice Department is watching carefully...The prosecuters will work hard to verify what he claims...We may be seeing perjury taking place...I expect Skilling to go to prison -- there will be enough well-placed folks down in the food chain who will testify against him (in exchange for immunity). |
