The prosecution’s star witness in the Enron trial took the stand today. The jury learned about partnerships and side deals to make the company look better than it was. Houston Public Radio’s Capella Tucker reports.
Former Chief Financial Officer Andrew Fastow methodically described the different partnerships set up to hide Enron losses and inflate earnings.
The former CFO said the partnerships, such as LJM and Raptor, were legal but that some things he did as a general partner were illegal. Fastow named several other Enron employees who discussed the deals with him, Jeff Skillings name came up repeatedly.
In one deal Fastow said Enron was able to pay away $11 million and in exchange be able to hide hundreds of millions of dollars in losses.
Fastow described how the deals also helped boost the stock price which in turn would mean larger bonuses for senior management.
Fastow testified that Skilling stopped using the LJM partnership only because it was starting to raise too many questions by analysts.
Late in the afternoon, the testimony turned to events happening just months before Enron collapsed. Fastow testified that the investing public was not told about the risk Enron was taking in the energy trading operation.
When Enron’s stock was falling, Fastow said he suggested crafting a different story in order to boost the stock price. Fastow testified his suggestion was met with stunned silence.
Fastow said he met with Skilling to discuss losses in international assets. He told the jury that Enron didn’t have another rabbit to pull out of the hat.
Reporting from the Federal Courthouse, Capella Tucker, Houston Public Radio’s Business News.