Enron 'held no cookie jar fund'

Mr Skilling says he was not aware of any illegal activity at Enron

Enron never used illegal cash reserves to disguise massive trading profits or cover earnings shortfalls, former chief Jeffrey Skilling said on Wednesday.

In his third day on the witness stand at a trial in Houston he testified that there was no "cookie jar" account.

Along with Enron founder Kenneth Lay, he is charged with hiding billions of dollars of losses and of lying about the state of the energy-trading firm.

Both men deny the charges. Enron failed in 2001 with debts of $31.8bn (£18bn).

'A good team'

Mr Skilling was denying claims by a former Enron executive that the company earned massive profits from trading power during the California power crisis in 2000 and illegally dumped the money in a "cookie jar" account to cover possible earnings shortfalls in the future.

"There were no cookie jar reserves at Enron," he told defence lawyer Dan Petrocelli.

He also defended the reputation of Enron founder Kenneth Lay, saying the two were a "good team" that never knowingly broke the law.

Mr Skilling is charged with 28 counts of conspiracy and fraud related to the company's collapse.

If found guilty he faces a maximum sentence of 275 years in prison - although any jail term is likely to be around 20 years - and tens of millions of dollars in fines.

Meanwhile Mr Lay, 63, faces six charges of fraud and conspiracy and could face up to 45 years in jail if convicted.

Both men have denied the charges against them, instead laying the blame for the accounting problems at the door of Enron's former chief financial officer Andrew Fastow.

Mr Fastow has already pleaded guilty to fraud charges and is a prosecution witness.