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News
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Skilling claims he knew nothing
graphic February 7, 2002: 7:18 p.m. ET

Enron's ex-CEO blames bank run for Enron collapse. Four other execs take Fifth.
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  • Special Report: Enron's Collapse
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  • CNN.com - Lawmakers irked as ex-Enron CEO backs out -- Feb. 4, 2002
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    NEW YORK (CNN/Money) - Former Enron CEO Jeffrey Skilling repeatedly told Congressional investigators Thursday that he knew nothing of any off-the-books partnerships used by Enron Corp. to hide debt, a move which ultimately led to the collapse of the once-powerful energy trader.

    Skilling, in nearly three hours of testimony before a House Energy and Commerce Committee, appeared unshaken by most of the questions posed by Congressional investigators. In opening remarks, the former executive said he was not aware of any financing arrangements designed to conceal liabilities or inflate profitability.

    Skilling later admitted he was a "controls" freak but said there was no way for him to know all that was going on at the once-powerful energy trader. He repeatedly denied knowing about transactions that Enron used to hide nearly $1 billion in debt. "Enron Corp. was an enormous corporation," Skilling said. "Could I have known everything going on in the company?"

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      graphic Skilling testifies on Enron.

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    Instead, Skilling blamed Enron's collapse on liquidity problems. "There are things called a run on a bank. You can have a fundamentally solvent company that has a liquidity problem," he said.

    Skilling said he felt "devastated and apologetic about what Enron has come to represent." He added that when he left the company in August, 2001, he "fervently believed that Enron was not in any financial peril." Details

    Enron's former in-house lawyer Jordan Mintz testified that he repeatedly tried to talk to Skilling regarding conflicts of interests posed by Andrew Fastow, then Enron's chief financial officer, having a financial interest in the partnerships. However, Mintz was consistently rebuffed.

    Enron's various transactions required the approval of Skilling and other executives. However, Skilling did not sign many of the forms, Mintz said.

    "I didn't sign the documents because they were not given to me," Skilling told the lawmakers.

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    Rep. James Greenwood (R-Pa.), head of the oversight subcommittee of the House Energy and Commerce Committee, told Lou Dobbs Moneyline he doubted the veracity of Skilling's testimony.

    "It was very difficult to believe he was completely forthcoming with us," Greenwood said.

    Congressional investigators grilled Skilling for three hours Thursday and his testimony shows "that Skilling knew exactly what he was going on but did nothing about it," Greenwood said.

    The Enron saga could also lead to future legislation, the Congressman said.

    "You can't legislate morality," Greenwood said, adding that unfortunately some people will always take advantage of others. But he added: "Some very bright lines have to be draw to bring us into the 21st century for the economy we have now. We can make some very bright lines in the law."

    Four remain silent

    Unlike Skilling, Fastow, ousted as Enron's CFO last October, refused to testify. Three other executives also invoked their Fifth Amendment rights to protect themselves against self-incrimination, refusing to testify before the committee.

    But newly appointed Enron President Jeff McMahon discussed some of the partnerships and some of the deals that led to the giant energy company's collapse. Details

    Skilling's testimony had been widely awaited to see if it would shed more light on Enron's condition in the months prior to its collapse. Enron's bankruptcy filing on Dec. 2 - the biggest in U.S. history - cost thousands of employees their jobs and many more who had Enron stock in their 401(k) accounts much of their life savings.

    Meanwhile, lawmakers vowed to get to the bottom of Enron's collapse, even though four of the 10 witnesses who appeared before the panel opted to remain silent.

    "Reluctant witnesses will not keep us from getting at the truth," Rep. James Greenwood (R-Pa.), chairman of the Oversight and Investigations Subcommittee, said in opening remarks.

    "It's a simple story of old fashion theft and inexplicable acts that allowed the perps to get away and destroy a company," Rep. Billy Tauzin (R-La.), chairman of the House Energy and Commerce Committee, added.

    Michael Kopper, a former company officer, invoked the Fifth Amendment, as did Richard Causey, Enron's chief accounting officer, and Richard Buy, the company's chief risk officer. Details

    In other Enron developments:

    On the eve of Skilling's testimony, the committee released new documents outlining Skilling's possible knowledge about Enron's outside partnerships, which are being scrutinized in the wake of the company's bankruptcy.

    A committee spokesman said the memos indicated that Skilling may have been trying to keep his "fingerprints" off transactions related to the partnerships.

    Skilling's resignation as CEO of Enron in August 2001 triggered widespread speculation in the energy industry about what was going on at the company, the seventh biggest in the United States at the time. He was succeeded as CEO by Kenneth Lay, who has since resigned.

    Lay, Enron's former chairman, is to appear before the Senate Commerce Committee and the House Financial Services Committee on Tuesday and Thursday. But he had not decided as of late in the week whether to testify or invoke his Fifth Amendment right, a spokeswoman for him told CNN/Money.

    "It has not been determined whether he will take the Fifth. It's an approach he is working out with his attorney," the spokeswoman said. Details

    Congressional investigators have uncovered "substantial evidence of illegal activity" by Enron and its management, Tauzin said Wednesday.

    That was a day after the committee heard testimony from William Powers, author of a key report that blasted how Enron handled the special partnerships that hid debts and enriched some of its executives.

    The report revealed that many of the deals put together by Enron and CFO Fastow had nothing to do with any economic benefit but with hiding Enron's massive debt load from investors. "If the report is accurate there may be some criminal charges," Tauzin added. Details

    Meanwhile, Joseph Berardino, the embattled CEO of Arthur Andersen, Enron's former accounting firm, pointed the finger of blame back at Houston-based Enron. Berardino, speaking Tuesday before the House Financial Services Committee, refuted claims made by an Enron director that the accounting firm refused to cooperate.

    Instead, Andersen had provided Enron with its audit papers and was in the process of setting up interviews when Enron fired the accounting firm, Berardino told congressional investigators. Details

    The Houston Astros asked a federal bankruptcy judge Tuesday whether the team should continue its Enron Field naming and license agreement with the company. The team said it has been "materially and adversely affected by the negative public perception and media scrutiny resulting from Enron's alleged bad business practices and bankruptcy." Details graphic


    CNN correspondent Kate Snow contributed to this report

      RELATED STORIES

    Special Report: Enron's Collapse

      RELATED LINKS

    CNN.com - Lawmakers irked as ex-Enron CEO backs out -- Feb. 4, 2002





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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

    Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

    Factset: FactSet Research Systems Inc. 2014. All rights reserved.

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    Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

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