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Thursday, 7 February, 2002, 23:35 GMT
Former Enron boss declares innocence
Jeffrey Skilling
Mr Skilling claims he knew nothing about bad finances
Jeff Skilling, former Enron chief executive, has said knew nothing of the complex web of financial arrangements that sent the energy giant into bankruptcy.

Mr Skilling said he "fervently believed" in Enron's future when he left the firm in August, four months before it collapsed following an admission of inflated profits.

Enron's former chief financial officer Andrew Fastow
Andrew Fastow: Refused to testify

"I did not believe the company was in any imminent financial peril," he told a US Congressional panel.

He also said he was not aware of financing arrangements designed to massage earnings data.

Enron's collapse was the result of a rapid loss of market confidence, rather than failures within the firm itself.

"At the time of Enron's collapse the company was solvent... and highly profitable," he said.

Fastow refuses

Mr Skilling's comments were examined by members of the panel and by an audience including former Enron workers, many of whom have savings held in Enron shares as well as their jobs.

But the subcommittee was denied the chance to interview other Enron executives, including former chief financial officer Andrew Fastow, chief risk officer Richard Buy and finance executive Michael Kopper, who declined to testify for fear of incriminating themselves.

Chief accounting officer Richard Causey also refused, claiming that because of a change to his legal team, he had been unable yet to obtain "meaningful" advice.

But Republican representative Jim Greenwood, in an address opening Thursday's session, said the failures to give evidence would not hinder the committee's investigation.

"We will still be able to get some important answers today," he said.

Key meeting

Much of the questioning of Mr Skilling centred around the maze of partnerships which some observers have claimed proved breeding grounds for unethical business behaviour.

Mr Skilling said he could not remember a board meeting being told that he would approve the partnerships, which Mr Fastow earned $30m for running.

"I was in and out of the meeting," Mr Skilling said.

He had no knowledge that the partnerships had been designed to hide losses.

"It was my understanding that the purpose of the transactions was to provide a real hedge," said Mr Skilling, who in his opening statement said partnerships were "commonplace in corporate America".

In separate evidence, current Enron head Jeffrey McMahon said he had been transferred to a new job after complaining in March 2000 to Mr Skilling about the partnerships.

"His parting words to me were he understood all my concerns and would remedy the situation," Mr McMahon told the panel.

'Widespread failure'

In his opening address, Mr Greenwood said that inquiries so far had revealed that Enron's collapse involved not just a few "rogue employees".

"A disaster of this magnitude requires the complicity of far more than a few bad apples," Mr Greenwood said.

"From senior managers to corporate directors to outside counsel to accountants, almost no-one who had the power to sound the alarm... did so."

The story of Enron's financial collapse was "almost biblical in its scope", he added.

But Mr Skilling said he was "proud" of what Enron had achieved under his leadership in transforming energy markets.

"We believed that we were changing a trying industry, helping an in trouble energy industry.

"We were also trying to save consumers and small business billions of dollars each year."

High risk

Mr Skilling's agreement to testify to Congress, despite the risk of self-incrimination, was described by Todd Zywicki, a law professor at George Mason University, as a high-risk strategy.

"Jeff Skilling is playing very high-stakes poker here," Mr Zywicki said.

"The whole case so far has been basically musical chairs, shifting the blame to figure out who's going to be left holding the bag.

"Clearly at this point [Mr] Skilling seems to have calculated that he's not going to be the one who's going to take the fall."

Jeffrey Skilling
"I was not aware of any financing arrangements designed to conceal liabilities"
The BBC's Lesley Curwen
"Politicians...were sceptical of his claims"
The BBC's Alison Gee
"Former employees... thought evidence was slick, self-serving and rang a little hollow."

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