Enron’s former boss lied about the state of the firm’s finances months before its collapse, the company’s ex-finance chief has testified.
Andrew Fastow said Ken Lay claimed that Enron’s finances were robust in a interview in August 2001 despite him being aware of mounting problems.
“It was what Mr Lay was saying. It was a lie,” Mr Fastow – chief prosecution witness – told jurors in Houston.
Ken Lay and ex-colleague Jeffrey Skilling deny 35 counts of fraud.
They are accused of making false statements to the media and staff about Enron’s finances prior to its spectacular collapse in October 2001 but deny any wrongdoing.
In his second day of testimony, Mr Fastow said Mr Lay publicly claimed that Enron was financially sound even though Mr Fastow had told him that Enron would have to write-down the value of its assets by $1.2bn.
Asked about an interview given by Mr Lay to Business Week in August 2001 – in which Mr Lay claimed that the firm was “probably in the best shape that it has ever been” – Mr Fastow said this was not true.
“I think most of the statements in there are false,” he said.
“It was what Mr Lay was saying, what the company was saying. I was trying to keep the deception up as well.”
Mr Fastow said he recommended Enron undergo a major restructuring but despite a meeting with advisor Goldman Sachs, nothing came of it.
Defence lawyers for Mr Skilling – Enron’s former chief executive – said Mr Fastow had showed “insatiable greed” in his dealings with Enron, having received huge kickbacks from the firm.
Mr Fastow’s wife served a year in prison for submitting a tax return which did not show the income kickbacks intended for her husband.
“I believe I was extremely greedy,” Mr Fastow admitted.
“I lost my moral compass and I have done terrible things that I very much regret.”