Enron money man 'raided reserves'

Enron founder Kenneth Lay denies all the charges brought against him

Enron boosted its earnings by dipping into reserve accounts, a former chief accountant at a unit of the scandal-hit energy company has testified in court.

Wesley Colwell claimed that he shifted $14m (£8m) from one account onto Enron's balance sheet so that the firm could beat Wall Street profit targets.

Prosecutors are trying to prove that Enron's former bosses manipulated accounts to boost its share price.

Enron collapsed in 2001 with debts of $40bn, shaking the US corporate world.

Negative publicity

Enron founder and former chairman Kenneth Lay and ex-chief executive Jeffery Skilling are on trial in Houston accused over their roles in what prosecutors call a massive fraud.

Mr Lay faces seven counts of fraud and conspiracy, while Mr Skilling faces 31 counts of fraud, conspiracy, insider trading and lying to auditors about Enron's financial position.

Both men have denied the charges and argue that they knew nothing of what was going on in the company because the fraud was being carried out, and hidden, by people working underneath them.

They also argue that negative publicity and a slump in market confidence prompted Enron's rapid collapse.

On Monday, prosecutors asked Mr Colway if he used reserve accounts at Enron North America to "manipulate Enron's reported earnings" during two quarters of 2000.

"Yes," Mr Colwell replied.

'Tell the truth'

Mr Colwell alleged that he had twice taken $7m from a fund of $70m that was set aside to pay a contract, allowing Enron to boost its earnings per share figure to 34 cents from 32 cents.

However, Mr Colwell said that he had not been ordered to make the changes by anyone at the company. He said that it was understood to be Mr Skilling's "preference" that the earnings beat analysts' estimates.

Mr Colwell, 46, was called to the stand after striking a deal with prosecutors, and after paying $500,000 to settle civil allegations brought by the US market watchdog Securities and Exchange Commission.

"If I tell the truth and don't withhold any information, I will not be prosecuted for my crimes while at Enron," Mr Colwell told jurors on Monday.