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Last Updated: Wednesday, 15 February 2006, 10:09 GMT
Ex-Enron chief 'misled investors'
Former Enron chief executive Jeffrey Skilling
Mr Skilling was closely involved in the business, prosecutors say
The former chief executive of collapsed energy firm Enron told staff to mislead investors about the company's earnings, according to a key prosecution witness.

Jeffery Skilling, who is standing trial on fraud changes, urged colleagues to report smaller-than-expected losses, former executive Kenneth Rice said.

Mr Rice, who oversaw an Enron internet firm, said Mr Skilling told staff "this is what the number is going to be".

Mr Skilling and former Enron chairman Kenneth Lay both deny fraud charges.

Enron collapsed in 2001, under debts of $40bn (23bn), in what was the biggest corporate scandal in recent US history.

'Very hands-on'

Enron's troubled broadband internet business EBS was at one point on course to report a quarterly loss of more than $146m, despite publicly saying that the loss would be closer to $35m, Mr Rice told a court in Houston on Tuesday.

As the broadband unit's financial position became increasingly precarious, Enron started selling future revenue from its contracts, Mr Rice said.

"I felt we were so addicted to our quarterly earnings that we were selling our future revenue potential," he said.

Mr Rice also countered claims by Mr Skilling that the former chief executive was not closely involved with the deals which eventually lead to Enron's downfall.

"Mr. Skilling was very engaged in the business, he was very hands-on," Mr Rice said. "Almost any transaction of any size we would bring to Mr Skilling to get his approval."

Mr Rice, who ran EBS until July 2001, has already pleaded guilty to charges of securities fraud and is awaiting sentence. He faces up to 10 years in jail.

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