Defence lawyers grill Enron ex-CFO

Defence lawyers have said Andrew Fastow, Enron's former chief financial officer, duped his bosses into thinking he was making heroic efforts for the company while he stole millions and planted the seeds of its destruction.

    The Houston-based energy giant filed for bankruptcy in 2001

    They portrayed him as a skilled liar in a cross-examination that went to the heart of the defence case that former chief executives Ken Lay and Jeffrey Skilling believed Enron was financially strong and went bankrupt only because of Fastow's double-dealings.

    "You were very proficient at looking him (Lay) right straight in the face and telling him you were loyal and he could count on you, but you knew in your heart you were stealing from the house," said Lay's lawyer Mike Ramsey.

    "You were successful in your lying and your deceit from 1997 all the way up to 2001, weren't you, sir?"

    "With regard to everything, I had all of those people fooled, yes, sir," Fastow responded.

    Fastow, who concluded his testimony after four days on the witness stand in the fraud and conspiracy trial for the two former Enron leaders, accused them of deceiving shareholders about the true state of the crumbling energy firm.

    Top executive

    As the architect of Enron's finances and a top executive who worked closely with Lay and Skilling, Fastow is the government's key witness, so the defence tried hard to undermine his testimony.

    "Without documentary corroboration, can you think of one reason why your testimony should be deemed credible?" Ramsey asked.

    "That's argumentative," US District Judge Sim Lake said before Fastow could answer.

    Lay (L), a former Enron CEO,
    denies any wrongdoing

    Enron, once the nation's seventh-largest company and a Wall Street favourite because of its booming earnings reports, filed for bankruptcy in December 2001 following disclosures it had used off-the-books deals to hide debt and inflate profits.

    The Enron collapse cost employees and investors billions of dollars and led to reforms in corporate accounting.

    Fastow ran the side deals and has admitted looting them for millions of dollars. He pleaded guilty to two conspiracy counts and agreed to co-operate with prosecutors in exchange for a 10-year jail sentence he is expected to begin soon.

    The defence contends that Enron, despite a few problems, was a solid company done in only because disclosures of Fastow's misdeeds caused lenders, creditors and customers to panic.

    Fastow testified that the company was deeply in debt and cooking the books to report profits that really did not exist, but Ramsey and Skilling lawyer Daniel Petrocelli tried to show things were not that bad.

    Huge money

    Enron made "serious, huge money" from its trading operations in the California power market, Ramsey said, and never lost money in its dealings with Fastow.

    Petrocelli argued that off-the-books deal such as the LJM partnership managed by Fastow were legitimate, even if Fastow's actions were not.

    Ramsey, citing notes Fastow made of a phone conversation with Skilling, quoted Skilling as saying: "The shareholders should give us medals for doing all these deals."

    Booming earnings reports made
    Enron a Wall Street favourite

    The two lawyers, as they have with previous witnesses, accused Fastow of trying to curry favour with prosecutors by lying to help them get a conviction in the high-profile case.

    Lay and Skilling face a combined 35 criminal charges in the trial, now in its seventh week, but have denied any wrongdoing.

    "Would you exaggerate to help your position with lawyers on the (Enron prosecution) task force?" Ramsey asked.

    "No sir, I believe exaggeration would not be telling the truth. I'm trying to be truthful," Fastow said.

    "I am ashamed to the core. I'm sorry for what I've done to other people, my family and my community. I destroyed my life and, yes sir, I'm sorry to the core," he added.

    "You only came to this epiphany when you were threatened with 200 or 300 years in jail" in a 98-count indictment," Ramsey countered. "You woke up one day and said gee, I'm guilty, but so is everybody else."

    SOURCE: Reuters


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