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Enron ex-CEO pitched partnership to California fund

Former Enron Corp chief executive Jeffrey Skilling, who told Congress he had no detailed knowledge of the controversial investment partnerships which brought his company down, actively pitched one such partnership to a California investment fund in 1997, a senior state official confirmed on Monday.

California Controller Kathleen Connell said a transcript of a December 1997 meeting of the California Public Employees Retirement System board of directors showed Skilling answered detailed questions about the investment deal, known as "JEDI II".

Connell released parts of the transcript to the San Jose Mercury News -- editing out all but her own comments in deference to CalPERS lawyers, who ruled that a full transcript of the closed door meeting was not a part of the public record.

But she said the question-and-answer session with Skilling clearly demonstrated that he understood how the partnership was set up and what its risks and benefits were.

"It was apparent that Skilling knew the details of the partnership and was able to discuss the details," Connell told Reuters in an interview.

"I specifically raised the question of what we were going to do to improve corporate governance and he tried to assure me that Enron was separate from Enron Oil and Gas, and Enron Oil and Gas was separate from this partnership," Connell said.

'FAIRLY GOOD UNDERSTANDING'

"He seemed to have a fairly good understanding of the interrelationship of these entities."

Skilling, in a testimony before Congress on February 7, denied knowledge of questionable accounting and off-the-books partnerships like JEDI -- financing arrangements which Enron created allegedly to conceal liabilities or inflate profits.

His testimony has been greeted skeptically by leading lawmakers, who said Sunday he could be prosecuted for perjury if it is determined that he did not tell the truth.

Connell, who serves on the CalPERS board, said she decided to abstain from the final vote on the JEDI II investment, which was approved by the rest of the board.

The JEDI II partnership followed CalPERS successful $250 million investment with Enron in a natural-gas venture called "Joint Energy Development Investments," or JEDI I, which had brought the fund annual returns of more than 22 per cent over four years.

Last year, however, it became clear that partnerships such as JEDI were tied far more closely to Enron's balance sheet than the company had originally indicated, forcing Enron to restate its earnings back to 1997 by some $600 million and laying the groundwork for its collapse.

In December, Enron filed for Chapter 11 protection, the biggest bankruptcy in US history.

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