Enron Trial: Expert Witnesses on the Stand

Expert witnesses in accounting have been giving testimony in the fraud and conspiracy trial of Jeff Skilling and Ken Lay. Houston Public Radio's Ed Mayberry reports. Aired 5/4/06 during the KUHF Morning Business Report.

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Prosecutors allege moving risk books from Enron's retail energy business to its wholesale unit in 2001 was an illegal way to hide problems with retail, but an auditing expert witness said the moves are perfectly legitimate as a way to brace the company against potentially tough times ahead. Former Coopers & Lybrand auditor Walter Rush is a witness for Jeff Skilling.

Prosecutor Sean Berkowitz showed an e-mail from Wes Colwell to David Delainey saying Colwell would make any necessary changes to make targets. Berkowitz said that shows the intent of Enron to adjust the reserves based on an earnings goal. Rush said that doesn't matter if the numbers can be justified.

Ken Lay witness Jerry Arnold, a University of Southern California accounting professor, said Enron's accounting followed general accounting standards. Arnold disputed the government's contention that Lay knew the company's balance sheet included embedded losses, saying he's never seen that term seen in 40 years of study.

Prosecutors accused the bookkeeping expert of being well compensated to say whatever the defense wants him to say.

Ed Mayberry, Houston Public Radio News.

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