Witness Recalls Suspicious Events at Enron, Says She Didn't Think Them Illegal
Posted on: Friday, 24 February 2006, 18:00 CST
By Kristen Hays, South Florida Sun-Sentinel
Feb. 24--HOUSTON -- A former Enron Corp. vice president of investor relations testified Thursday that in the months before the company failed in late 2001, she witnessed behavior by top company executives that concerned her but didn't think crimes were being committed.
"I observed events that I thought were wrong, so I did make a conclusion. I didn't make a conclusion that it was legal or illegal," Paula Rieker said under cross-examination in the fraud and conspiracy trial of company founder Kenneth Lay and former Chief Executive Jeffrey Skilling.
She said Skilling twice told analysts during a conference call on second-quarter 2000 earnings that sales of inoperative fiber-optic cable accounted for $50 million in revenue for Enron's broadband unit. She said she had told Skilling days earlier that virtually all of the unit's $140 million to $150 million in revenue came from the fiber sales.
Skilling's answer let analysts believe the other two-thirds of the fledgling unit's revenue came from business operations rather than asset sales, she said.
"I know Mr. Skilling knew the right answer, and I felt he gave the wrong answer purposely," she said.
While Rieker insisted Skilling deliberately misled investors, she acknowledged she didn't correct him. She also said she felt pressure to omit the fiber sales from a press release about second-quarter 2000 earnings, but she said he never explicitly told her to lie to investors or the public.
"Did you make an agreement with Mr. Skilling to break the law?" asked Skilling lawyer Daniel Petrocelli.
"No," she said.
"Did you make an agreement with Mr. Lay to break the law?" he asked.
"No sir," she replied.
Later, under a second round of questioning from prosecutor John Hueston, Rieker said her contact with Skilling "conditioned me that he didn't want to be corrected."
Rieker finished testifying Thursday, her third day on the witness stand.
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Source: South Florida Sun-Sentinel
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