HOUSTON (CNNMoney.com) - In his second day on the stand, Enron's former chief executive Jeffrey Skilling vehemently denied that he had ever had any secret side deals with former financial chief Andrew Fastow or any other officer at Enron.

The side deals, which Fastow called "bear hugs," were purported to be guarantees that Fastow and his LJM partnerships - special-purpose entities that the government contends were used to transfer millions of dollars in losses off Enron's books - wouldn't lose any money by taking on risky Enron assets and would actually earn a premium on its investment.

Special Reportfull coverage Skilling gets 24 years Lessons from Enron: Just say 'sorry' Skilling's possible new home Skilling sentence likely to be a long one Meet the players Find out who you might have seen at the Enron trial, how they got involved, and what they're doing now. Launch gallery

Enron trial no Lay-up With all we know about Enron, convicting Lay and Skilling may seem like a sure win. It's not. (more)

"Mr. Petrocelli, I don't even know what a bear hug is," Skilling told his lead defense attorney Daniel Petrocelli. "I had no agreement with Andy Fastow that would guarantee him a rate of return on a project. Period. Full stop."

Skilling's voice became indignant as he declared "It's absolutely inconceivable that I would do such a thing."

Earlier, Skilling defended Enron's decision to create the controversial LJM partnerships and denied Fastow's assertions that Skilling was so excited about LJM that he insisted that Fastow create more of the entities.

Lead defense attorney Daniel Petrocelli asked Skilling, "Did you say 'get me as much juice as you can?'" referring to Fastow's testimony last month that LJM "juiced" Enron's earnings.

"Not that I recall," Skilling responded. "I don't use the word juice in that context."

Skilling also testified that he believed that the LJM partnerships were all legitimate, third-party entities that provided a valuable service to Enron by providing the company with faster transactions and additional capital for deals. He said the board of directors approved the transactions and set into place controls to prevent any conflict of interest that could have resulted from Fastow's dual role as CFO and general partner of LJM.

"Was LJM a puppet of Enron?" Petrocelli asked. "No, it was not," Skilling insisted, adding that LJM's investors were among the top financial institutions in the world, including Citigroup (Research), JPMorgan Chase (Research) and AIG (Research).

"This list here is one of the most sophisticated groups of investors I have ever seen in one single investment," Skilling said. "I doubt seriously they would have let us control their investment."

And he added that LJM wasn't a large part of his duties, saying he only spent about four hours in total dealing with LJM.

But he said by May 2001, he was becoming increasingly frustrated with Fastow's relationship to LJM – an issue that was raised through the testimony of defense witness Mark Metz last week. He said Fastow's dealings with LJM were consuming Enron's time as they were forced to employ more manpower to making sure his compensation was properly disclosed in Enron's 2002 proxy.

"This was a molehill turning into a mountain," Skilling testified. "I didn't mind disclosing it... I was becoming increasing antagonized that this was taking peoples' time."

Skilling said he gave Fastow an ultimatum: choose LJM or Enron, prompting Fastow to sell his stake in LJM shortly thereafter.

Skilling added that if he had been aware at the time that Fastow was siphoning off millions of dollars from Enron, he would never have voted to allow him control of LJM.

Skilling also attempted to refute prior testimony from former Enron executives Mark Koenig, Paula Rieker and Wes Colwell who stated that the company changed its earnings report for the fourth quarter of 1999 and the second quarter of 2000 in order to beat Wall Street's estimates.

Skilling said that the former executives hadn't been truthful, and he testified that Enron's earnings estimates were a moving target that often changed up until the last minute.

But he said he had "absolutely no recollection" of assertions by Koenig, the former head of investor relations, that in the fourth quarter of 1999, Enron discovered that it would miss Wall Street estimates by a penny.

He said he had never been told that the company would artificially manufacture an extra penny in order to meet Wall Street expectations.

"I have no recollection of that," he repeated.

Skilling also denied the government's assertion that Enron wanted to beat Wall Street figures at all costs in order to bolster its stock price.

He pointed to Enron's stock price the day of its second quarter 2000 earnings release, which closed flat despite the fact that the company came in 2 cents above analysts' expectations, and was down the following day.

Skilling further testified that he considered himself to be "an optimistic person," and when he told analysts on conference calls that the business was in good shape, he was being sincere and honest.

Enron's former chief executive kicked off his second day of testimony lauding the company's strength as he professed to the jury that his devotion to Enron outweighed his own personal financial interests.

As lead defense attorney Daniel Petrocelli read the charges from the government's indictment that Skilling and Enron founder Kenneth Lay conspired to defraud the public about Enron's true financial health, Skilling denied that Enron had any reason to be deceptive.

He testified that he and Lay had never conspired to create any schemes and never directed anyone else in the company to mislead the public.

"Are you sure?" Petrocelli asked.

"I am absolutely positive. There is no truth to that allegation," Skilling replied.

"Are you smart enough to mastermind this kind of conspiracy and not get caught?" Petrocelli pressed on.

"I don't think so," he responded.

Skilling testified that he had no financial incentive to commit a crime because by 1999, his net worth totaled about $100 million. He added that he had also turned down $70 million in cash from his interest in the wholesale business earlier, opting instead to cash out $21.5 million from his stock holdings in the business he helped start.

He said he wanted the board of directors to clearly understand that Enron was his primary concern and the money was secondary.

Petrocelli also asked Skilling if he was "consumed by greed" - a reference to former financial chief Andrew Fastow's testimony last month that Skilling was overcome with greed, driving him to commit crimes.

"I was perfectly happy with what the company provided me," he said. "They could trust me that I'd represent the interest of shareholders rather than my personal interest."

In his first day on the stand, Skilling sought to repair the image the government presented during its phase of the trial of a man so consumed with greed and power that he ultimately brought down the company he helped build.

Gone was the brash, temperamental villain jurors had heard about as Skilling opted for a more subdued, congenial demeanor, even as he vehemently defended his innocence.

"I am absolutely innocent," Skilling declared just moments after being sworn in. "The charges against me are wrong. I am innocent of those charges and I will fight those charges until the day I die."

Throughout Monday's testimony, Skilling maintained that he didn't believe that Enron had engaged in any improper conduct.

At the end of the day, Petrocelli said his direct examination of Skilling will likely go into Thursday of this week. Government prosecutor Sean Berkowitz is expected to cross-examine the defendant.

Lay and Skilling, who together face nearly three dozen fraud and conspiracy charges, are accused of lying to investors about the company's financial state while they enriched themselves by selling millions of dollars in stock.

Legal experts say the defendants could face 20 to 30 years behind bars if convicted of the charges. Lay will also face an additional trial for fraud once the current trial in Houston is over.

Enron was once the seventh-largest corporation in the U.S. It declared bankruptcy in December 2001, costing 4,000 employees their jobs and resulting in billions in losses for investors.

_____________

For complete coverage of the Enron trial, click here.