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Witness says execs heavily involved in enron Original Source Link: (May no longer be active)
http://news.yahoo.com/s/ap/20060201/ap_on_bi_ge/enron_trialhttp://news.yahoo.com/s/ap/20060201/ap_on_bi_ge/enron_trial
Witness: Enron Execs Heavily Involved in Co.
By KRISTEN HAYS and ERIN McCLAM, Associated Press Writers
22 minutes ago
HOUSTON - Enron Corp.'s former chief contact for investors described company founder Kenneth Lay and former CEO Jeffrey Skilling on Wednesday as heavily involved in running the company, which collapsed in scandal in December 2001.
In the first day of testimony in Lay and Skilling's fraud and conspiracy trial, Mark Koenig said Enron's stock price was "very important" to his former bosses. He also said both disliked Wall Street analysts who weren't bullish on the stock — a rarity in Enron's high-flying years before the company crashed, leaving thousands jobless and wiping out billions of dollars from investors.
Koenig, the first witness in what is expected to be a four-month trial, is one of 16 ex-Enron executives who are cooperating with prosecutors after cutting plea deals.
Prosecutors say Lay and Skilling lied to investors about Enron's financial health, claiming the company was strong when they knew otherwise, to keep the stock price up. The former executives say they committed no crimes and that the company collapsed under investor panic fueled by negative publicity.
Prosecutor Kathryn Ruemmler asked Koenig why shareholders should know Enron's true financial condition.
Koenig replied, "Their investment is at stake."
Koenig, 50, a native of Omaha, Neb., pleaded guilty in August 2004 to aiding and abetting securities fraud, saying he knew Enron masked losses in a highly touted retail energy unit that never earned a profit by folding it into the division that included the company's trading unit.
He also admitted helping mislead analysts about profits in Enron's money-losing broadband unit. Both units went bankrupt along with the parent company.
Part of Koenig's job was to talk up the company to Wall Street and to help maintain the stock price. His career at Enron spanned 17 years, starting as a pension and investment manager for InterNorth, the Omaha pipeline company that merged with Houston Natural Gas in 1985 to form Enron. He joined investor relations in 1992.
Enron went bankrupt six weeks after announcing massive quarterly losses and a $1.2 billion writedown in shareholder equity. The company once loved by Wall Street suddenly faced suspicion and hostility that sent investors fleeing.
Skilling faces 31 counts of fraud, conspiracy, insider trading and lying to auditors. Lay faces seven counts of fraud and conspiracy. Both have pleaded not guilty.
In opening statements Tuesday, lawyers for Lay and Skilling said they are seeking much more than a "not guilty" in the government's premier criminal trial to emerge from the company's stunning collapse. They want to exonerate Enron as well.
Their lawyers steadfastly asserted that the men neither committed crimes nor looked the other way while minions cooked the books because Enron was never rife with corruption and greed.
"This is not a case of hear-no-evil, see-no-evil," said Skilling attorney Daniel Petrocelli, punctuating his opening statement by jabbing his finger at jurors. "This is a case of there was no evil."
A federal prosecutor told the more familiar story: Lay and Skilling repeatedly lied to maintain Enron's polished image of success when they knew the heady profits and growth were illusory.
"This is a simple case," prosecutor John Hueston told jurors in the government's opening statement. "It is not about accounting. It is about lies and choices."
Petrocelli even suggested most of the ex-executives who pleaded guilty to crimes were innocent, but caved in to pressure from zealous federal prosecutors and fear of prison.
Last month, Koenig revised his plea agreement to attribute to Skilling a statement that Koenig originally said he made on a 2001 call to mislead analysts about why Enron folded its money-losing retail energy unit into the company's profitable trading unit.
Among the charges against Skilling is an allegation that he told analysts during a July 2001 conference call regarding second quarter 2001 results that the retail energy unit, Enron Energy Services, "had an outstanding second quarter" when he knew the unit faced hundreds of millions of dollars in concealed losses.
Koenig's original statement attached to his guilty plea said that when an analyst participating in the call asked about the unit's restated results, he replied that the variance stemmed from folding the retail unit into the trading unit "and asserted that those moves were made simply 'to get some more efficiency out of management of the overall risk management function for the units."
Koenig's revised statement says he responded initially as he originally described, but Skilling told analysts those moves were made simply "to get some more efficiency out of management of the overall risk management function" for the units.
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