Text of Morning Session of Hearing on Enron
The New York Times
February 7, 2002
(Page 19 of 22)
MR. SKILLING:s meeting was the
meeting that occurred in Palm Beach,
Florida. This is October 6th of the year
2000. In that meeting, the power had
gone out, and as everybody remembers,
we were in a room -- the room was dark,
quite frankly, and people were walking
in and out of the meeting, trying to --
REP. TAUZIN: You never heard Mr.
Fastow say that you would approve all
these transactions?
MR. SKILLING: I don't recall.
REP. TAUZIN: You just don't recall?
MR. SKILLING: I do not recall.
REP. TAUZIN: But you never, ever said to the board or the committee, "Uh-uh, I'm not
going to do that. I'm not going to approve these transactions."
MR. SKILLING: I wouldn't have to. In October of 1999, when the process was
established for approval of transactions with LJM, the process was absolutely
crystal-clear. It involved approval by Mr. Causey and Mr. Buy --
REP. TAUZIN: Is that why you wouldn't sign these documents?
MR. SKILLING: No. (Inaudible) --
REP. TAUZIN: Why didn't you sign? Tell me that, please.
MR. SKILLING: May I give you -- you'll give me time to answer?
REP. TAUZIN: You got it. Please do.
MR. SKILLING: Okay. Thank you, sir. First, I did not receive that memo. Second of all --
REP. TAUZIN: Wait, wait. You're saying you did not receive
Mr. Mintz's memo?
MR. SKILLING: To my recollection, I did not receive that
memo.
Second, I had no -- I would have had no problem signing that,
and I believe if you look at the specifics of the memo of Mr.
Mintz's -- in fact, do you have the reference for Mr. Mintz's
memo in there? Do you have a copy of that --
REP. TAUZIN: Mr. -- we have a copy of the memo.
MR. SKILLING: Can we turn to that?
REP. TAUZIN: We also have his testimony right before you got
here. It said he tried three times to ask you for a meeting to talk about the memo. Do
you recall that?
MR. SKILLING: Would you -- I do not recall that. Would you mind if we turned to that
memo?
REP. TAUZIN: Sure.
MR. SKILLING: And which --
(Off-mike remarks from staff.)
REP. TAUZIN: Tab 15.
MR. SKILLING: Number 13?
MR. : Thirteen.
REP. TAUZIN: Thirteen. I'm sorry. Tab 13.
It is 15. I'm sorry.
MR. SKILLING: Fifteen.
I draw your attention to a couple of points in this memo, Mr. Chairman.
REP. TAUZIN: Please do.
MR. SKILLING: The first one is, is that it says, "Accounting and RAC (?) require the
signatures of Rick Causey and Rick Buy. Such approval sheet also provides for your
signature."
In the next paragraph it says, "All required sign-offs for the 2000 transactions have
recently been completed." All sign-offs have recently been completed.
And then further in that same paragraph it says, "In our discussions arranging for your
signature" -- which, as it said, the form "provides" for my signature -- it says that "it
was decided to provide you with all finalized approvals in aggregate rather than a
piece-meal fashion, and we are now ready to do so." Which --
REP. TAUZIN: In other words, everybody had signed, they were ready to get your
signature --
MR. SKILLING: The transactions were done. The transactions had been completed.
REP. TAUZIN: Of course. I'm not arguing that. I'm just asking you --
MR. SKILLING: The transactions could not have been completed -- Jordan Mintz is a
lawyer for Enron Corporation. Those transactions could not have been completed if it
was necessary for me to authorize those transactions. It couldn't have been done.
REP. TAUZIN: I'm not asking whether you authorized them. I'm asking whether you
signed the approval sheets, because there is an issue here, Mr. Skilling, whether or
not under the controls set up by the board, as they understood them, you were
required to do so, to review and approve.
And you're telling us, number one, you never got the Mintz memo. Number two, you
don't recall anybody asking you to set up a meeting to discuss signing these
documents. And number three -- I'm still asking you -- why didn't you sign them at all?
MR. SKILLING: They were not given to me.
REP. TAUZIN: You never saw them?
MR. SKILLING: I do not recall being presented with these documents. I do not recall
being presented with --
REP. TAUZIN: I've exceeded my time. Thank you, Mr. Chairman.
REP. GREENWOOD: The time of the gentleman has expired.
The chair recognizes the gentlelady from Colorado, Ms. DeGette.
REP. DIANA DEGETTE (D-CO): Thank you, Mr. Chairman.
Mr. Skilling, you knew certainly in 2000, and probably sooner, that these LJM
transactions, in particular, there were risks of a conflict of interest with Mr. Fastow,
did you not? Because Mr. Fastow --
MR. : Are you addressing that to Mr. Skilling or to me?
MR. SKILLING: Are you asking if I knew that there was a conflict of interest associated
with LJM --
REP. DEGETTE: There was a potential conflict of interest --
MR. SKILLING: Absolutely. That's why we --
REP. DEGETTE: Absolutely.
MR. SKILLING: That's why we put the procedures in place to eliminate that conflict.
REP. DEGETTE: And that's why, as you said, you were a "control freak," to make sure
that controls were in place, right?
MR. SKILLING: We would not have entered into the LJM --
REP. DEGETTE: Yes or no?
MR. SKILLING: -- transaction without adequate controls.
REP. DEGETTE: You wanted control, right? Yes or no?
MR. SKILLING: We would not have entered into the transactions if we had not had
adequate controls to manage the conflict of interest.
REP. DEGETTE: Okay. Now, you said that October 6, 2000, you don't recall being there
for this discussion about -- by Mr. Fastow about the LJM funds because the lights were
out?
MR. SKILLING: No, I don't. I do not recall.
REP. DEGETTE: Okay. So you don't recall him talking about how his role in the LJM
funds could potentially create a conflict of interest in that he negotiates for the LJM
funds?
MR. SKILLING: We were all --
REP. DEGETTE: Did you know he negotiated for the LJM funds?
MR. SKILLING: Actually, I believe Andy had represented to the board -- my recollection
is Andy had represented to the board that he would not be involved in direct
negotiations of LJM transactions.
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