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Enron ex-CEO says all was well, accepts no blame

Under harsh questioning before Congress, former Enron Corp chief executive Jeffrey Skilling on Thursday shouldered no blame for the bankrupt energy trader's collapse and said he had no reason to believe it was in financial trouble when he left last August.

Grilled by a congressional panel probing off-the-books partnerships and questionable accounting at what was once America's seventh-largest company, Skilling said he was "devastated by and apologetic about what Enron has come to represent."

But he icily deflected criticism from lawmakers of his role, saying he was unaware of problems at Enron when he resigned as CEO on August 14, citing personal reasons.

On Decemebr 2, Enron filed the largest bankruptcy in US history, wiping out thousands of jobs and billions of dollars in equity held by employees and other investors.

Rep James Greenwood, the Pennsylvania Republican who chairs the House Energy and Commerce oversight and investigations subcommittee, was incredulous.

"(Mr) Skilling, a massive earthquake struck Enron right after your departure. People in far inferior positions to you could see cracks in the walls, feel the tremors, feel the windows rattling. And you want us to believe that you sat there in your office and had no clue that this place was about to collapse?" Greenwood asked.>

Skilling replied: "On the day I left, I believed the company was in strong financial condition.

"I cannot for the life of me understand how we could go from where I thought the company was to bankruptcy in such a short period of time. It's astounding."

Skilling was questioned after former Enron chief financial officer Andrew Fastow and three other current and former Enron executives appeared, but exercised their Fifth Amendment constitutional right not to testify.

A FLURRY OF PROBES

The collapse of Houston-based Enron is under investigation by the Justice Department, the Securities and Exchange Commission and nine congressional committees.

The author of an internal inquiry report issued by Enron said on Tuesday the company tried to systematically manipulate its financial results and deceive shareholders as top executives raked in personal gains of millions of dollars.

Asked about those findings, Skilling said he was unaware of any financing arrangements designed to conceal liabilities or inflate profits, arguing that when Enron collapsed it was solvent and highly profitable, although not liquid enough.

Massachusetts Democratic Rep Edward Markey told Skilling, "What you have done here is to invoke the Hogan's Heroes Sergeant Schultz defense -- I see nothing, I hear nothing.'"

Under intense questioning, Skilling's steely facade broke only once when he was asked about his conversations with former Enron vice chairman Clifford Baxter, who killed himself last month. Skilling's voice caught when he described Baxter's despair over damage to his and Enron colleagues' reputations.

He said the man Skilling described as his best friend likened Enron's difficult experience to being called a child molester and feared the taint "will never wash off."

Skilling was otherwise cool and calm, peppering his comments with the phrase "to the best of my recollection" and often answered that he "did not recall," evoking past remarks by others before hostile congressional panels.

Earlier in a nearly eight-hour hearing, an Enron attorney who complained about off-balance-sheet partnerships that concealed a mountain of debt that ultimately brought the company to its knees told the panel that two senior officials warned him off approaching Skilling with his concerns.

The partnerships run by Fastow led Enron last year to slash its historic earnings and write down net worth, prompting a crisis in investor confidence that undermined the stock price.

Attorney Jordan Mintz said he was worried in late 2000 and early 2001 that Enron's dealings with partnerships known as LJM did not comply with procedures approved by the board.

Mintz said he was steered away from approaching Skilling by Enron chief accounting officer Richard Causey and Enron chief risk officer Richard Buy. "Both Ricks shared with me that Jeff was very fond of Andy (Fastow) -- don't go there," Mintz said.

LAWMAKERS VOW TO GET THE TRUTH

Lawmakers vowed to get to the bottom of Enron's collapse, despite the refusal of many senior executives to testify.

"Reluctant witnesses will not keep us from getting at the truth," said Greenwood.

Apart from Fastow, accused of amassing millions of dollars for himself while running the outside partnerships, Causey and Buy also exercised their Fifth Amendment rights to silence. Company sources said they were negotiating severance packages.

Former Enron chairman Kenneth Lay, who backed out of testifying to Congress earlier this week, has since been subpoenaed by two committees to appear next week.

Enron President Jeff McMahon told the subcommittee that when he was Enron treasurer in early 2000, he raised concerns about the LJM transactions and Fastow, but was brushed off and moved to a new job. McMahon said he raised his concerns in meetings in March 2000 with Skilling and Baxter.

"The LJM situation had basically gotten to the point that it was untenable for me and my group. ... Throughout the meeting, he (Skilling) pretty much listened," McMahon said. "His parting words to me were that he understood all my concerns and that he would remedy the situation."

Shortly thereafter, McMahon said he switched jobs at Enron after being told by Fastow and Skilling that he should do so.

Skilling said Enron had "literally thousands of partnerships." He said he knew there was a potential conflict of interest in Fastow's being both Enron CFO and heading the LJM ventures doing deals with Enron.

But he said he did not recall concerns about Fastow's activities being brought to his attention by subordinates.

In prepared remarks, members of the company's board blamed management, Enron's auditor Andersen and the company's outside law firm, Vinson & Elkins, for keeping them in the dark.

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