A former Enron insider peeled back more layers of corruption at Enron, including a single morning’s cover-up of $726 million in vanished cashflow.
The cover-up allegedly came at a crowded analysts’ conference in 2001 where Enron’s ex-chief Jeffrey Skilling failed to mention the whopper $726 million loss on its books, in essence spitting in the eye of Wall Street.
The testimony at the second day of bombshell accusations about frauds and cooked books at Enron came from the company’s former head of investor relations, Mark Koenig.
He told jurors that Enron’s entire management team knew about the loss in its Enron Energy Services subsidiary but Skilling wouldn’t disclose it in public reports or discuss it with analysts.
Prosecutors even played a tape recording of the meeting where Skilling told analysts that the unit was “profitable and on plan.”
Skilling’s lawyer Dan Petrocelli got agitated and jumped up to protest the testimony, saying it falsely gave “the impression that all this information was known” to Skilling.
Skilling and former chairman Ken Lay are on trial on three dozen charges of fraud that led to the $68 billion collapse of Enron five years ago.
In his second day on the witness stand, Koenig stopped short again of saying that either Skilling or Lay explicitly ordered the books cooked.
But he testified that Skilling didn’t mention anything about the losses for two straight quarters in 2001.
Koenig also said Lay and Skilling raised Enron’s yearly profit forecast for 2001 by 5 cents a share to $1.80 without any justification, except to impress Wall Street.
He said Enron Energy Services booked $726 million in risk management losses in the first half of 2001, but hid the losses by shifting part of the business to another unit.