Posted on 03/09/2006 5:14:37 PM PST by wagglebee
HOUSTON (Reuters) - Government star witness Andrew Fastow repeatedly admitted during cross-examination on Thursday he was a liar and a cheat as the defense tried to refute his testimony that former Enron Corp. chief executives Jeffrey Skilling and Ken Lay covered up their company's crumbling finances.
He said he had no written documents to back up his allegations against his former bosses, but said they were part of a broad conspiracy among Enron executives to mislead investors while enriching themselves.
"I was suggesting the senior management at Enron, not only Mr. Skilling, engaged in a pattern of actions that painted a picture of Enron that did not comport to what was going on,' he testified in the fraud and conspiracy trial of Lay and Skilling.
"And we all benefited from that with salaries that were larger than they should have been, bonuses that were larger than they should have been."
Houston-based Enron, an energy trader that was once the nation's seventh largest company, declared bankruptcy in December 2001 following disclosures it had inflated profits and hidden billions of dollars in debt in off-the-books deals run by Fastow.
He has admitted looting the partnerships for millions of dollars, pleaded guilty to two counts of conspiracy and agreed to cooperate with prosecutors in exchange for a 10-year sentence.
Lay and Skilling face a combined 35 charges, but have denied any wrongdoing and blamed Enron's collapse on Fastow's criminal activities.
As the highest ranking Enron executive to testify so far in the case and the mastermind of the company's most illicit deals, Fastow is considered the prosecution's key witness.
Skilling attorney Daniel Petrocelli accused him on Thursday of lying to help prosecutors hungry for a conviction in this high-profile case.
"You are very determined to get across to this jury not only what your actions are, but you want to convey to this jury over and over again that Mr. Skilling is guilty of fraud. Is that true, yes or no?" asked Petrocelli.
"I'm here to tell the truth," Fastow said.
Thursday's testimony was at times testy but mostly tedious as Petrocelli and Fastow plowed through details of the financial house of cards Fastow constructed at Enron.
Petrocelli led Fastow through the various side deals he ran, each time eliciting an admission of his misdeeds.
In one deal, Fastow told his partners that a Brazilian power plant they had invested in was worthless when in fact he intended to sell it for millions and pocket the money.
"I was trying to cheat my limited partners," he said matter-of-factly. "I knew the asset would be worth more and I was trying to take advantage of my limited partners."
Of another deal, he said: "I defrauded Enron and Natwest (Bank) of the $19 million, as we discussed."
"Regardless of what all these pretty documents say, the accounting was wrong," he said of another transaction.
"You drive a hard bargain, don't you?" Petrocelli asked.
"I think I said on more than one occasion yesterday that I was greedy," Fastow said.
Fastow said on Wednesday that Lay, despite repeatedly denying it, knew Enron was piling up losses and debt as it spiraled toward bankruptcy, but he lied to investors, analysts and employees to hide the problems.
Skilling, he said, did the same, but also offered Fastow "bear hug" deals, or assurances he would make money, if he would take Enron's troubled assets into the partnerships he ran.
Fastow said he and Enron chief accountant Richard Causey initialed a handwritten agreement called the "Global Galactic Agreement" which assured the partnerships would make money. Skilling, Fastow said, approved it even though his initials are not on it.
"You made no notes of those conversations?" asked Petrocelli, who has said there is no paper trail of illegality leading to his client.
"I don't recall any," Fastow said.
"Do you recall any piece of paper that says you have a 'bear hug,' whatever, from Skilling?' Petrocelli asked.
"I can't recall any specific document," he said.
Great. Now how do we get Clinton to admit that he lied and cheated? What's that going to take?
Skilling was clever, but I think there is too much corroborating evidence of people already convicted of his knowledge and directions on these partnerships.
I agree,Lay may get off with a suspended sentence since he seems to have lost most everything as a result of Enron's collapse.
Nothing surprising here considering he is a corporate officer.
We'll see how much Lay has actually lost. What should be apparent, but may not be to the jury, is whether or not there is a pattern to which of the company's deals Skilling and Lay normally did initial or sign off on.
If this was one of those things they normally would have, it speaks volumes that there names weren't on it. The more astute criminals know to wear gloves or otherwise make sure they don't leave fingerprints.
Yup, I think that is key. Fastow and Causey have both testified that the partnerships would require Skilling to agree to this level of transfer of assets off-balance sheet.
(Even if I wrote "there names" instead of "their names"? Yikes.)
Surely they'll be precise about the dates on those "entities," too - as to when it was Lay's bailiwick, then Skilling's, then Lay's again.
'Tis awfully hard to "root for" this particular pros witness, that's for sure.
Agreed. A guy convicted and sentenced to 10 years in prison has to be a shaky witness for the prosecution. It is going to be hard for both prosecution and defense to explain this mess to a jury.
Based on my reading of "Smartest Guys in the Room" and the news when it happened and some people I know who worked for the company, I think Skilling and Lay should both go down. Skilling as the ultimate perpetrator and certainly Lay as a co-conspirator and enabler of the culture at Enron.
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