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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (2950)	3/7/2004 9:05:44 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 3602

Footprints in the Footnotes? Convicting Jeff Skilling will be tough. But the prosecutors weren't daydreaming when they wrote up his indictment. forbes.com Lynn J. Cook, 03.15.04 Theoretically, it should be easy to nail Jeffrey Skilling, Enron's former chief executive who faces 35 criminal counts. (He pleaded not guilty.) There was motive (compensation tied to profits) and opportunity (he oversaw the guys who created the fraudulent entities that hid debt). But unlike other Enron cons, Skilling was never caught with his signature on a damning memo. The self-described idea guy, who claimed he knew nothing of the shenanigans, left himself plenty of deniability. Or did he? The reports of Neal Batson, the court-appointed Enron examiner, suggest Skilling knew more than he let on. Examples: Beginning in 1994 Skilling and Kenneth Lay began each week with a one-to-two-hour meeting with the top finance guys to triage critical numbers "issues." Those off-the-books partnerships never came up? Right. Skilling told Congress he knew little of the hedging techniques of those partnerships. But apparently one of the hedges--shifting the price volatility of an investment in the Internet startup, Rhythms Netconnections--was so complex that Wincenty Kaminski, a Ph.D. in economics who headed an Enron group that analyzed such deals, approached Skilling and asked him to explain it. The day before Skilling abruptly left for "personal" reasons (Aug. 14, 2001), Andrew Fastow, the convicted ex-chief financial officer, issued an unprecedented memo to the Office of the Chairman (Lay and Skilling) spelling out Enron's hidden debt, showing that its prepay transactions--debt that looked like cash flow, which could be brought forward to match earnings--ballooned from $1.3 billion at the end of 1998 to more than $5 billion by June 2001. Batson says such prepays were likely the single largest source of cash during this period. Maybe Skilling was too busy cleaning out his desk to notice.