Trial, Day 9: It all depends on your definition of 'bad'

Ken Rice, the former head of Enron Broadband Services, took the stand in the Lay/Skilling trial yesterday, painting a picture of — surprise! — a failing Enron division atrificially bolstered by misleading public reports which he said ex-Enron CEO Jeff Skilling endorsed.

The second witness to take the stand in this case, Rice said he was expected to engage in all sorts of financial contortions to meet the earnings expectations assigned to his division, even though his two alleged revenue-generating businesses weren't generating anything.

"Mr. Skilling would simply say, in fact he did say, 'This is the number, this is what the number is going to be,'" Rice said of the earnings estimate predictions. Rice's testimony focused on Skilling, who he said was a hands-on boss who understood what was happening at Enron Broadband Services.

While Rice testified, Skilling sat at the nearby defense table. Though his co-defendant, former Chairman Ken Lay , often took notes, Skilling generally just folded his hands on his crossed legs. Occasionally the two defendants would catch each other's eye, once even sharing a small laugh.

Houstonist is glad Lay and Skilling are able to find humor in the humdrum courtroom life. We're envisioning a remake of The Odd Couple (network reps, drop us an e-mail to discuss payment). But back to the testimony: Rice also said EBS used former CFO Andrew Fastow's shady side partnerships to help maintain the broadband company's "growth story," and Skilling went so far as to coach employees before a 2001 analyst conference so their body language wouldn't betray their concerns about the division's problems. In another instance, Skilling told EBS employees during a March 2001 meeting that the broadband business's health was "bad," but eight days later, he told analysts that EBS had a great quarter, wasn't laying employees off and was experiencing strong growth. Semantics!

Houstonist's favorite story of the day was Rice's account of an Aug. 1, 2001, lunch he had with Skilling during which Skilling told Rice he was going to resign from Enron. Skilling said he was leaving for personal reasons and might buy a boat to sail around the world in:

"It was more like a ship. It was a big boat that you could put cars on and maybe a helicopter," Rice said.

Berkowitz asked what Rice did then and he said: "I went back to my office and I sold stock."

Rice will continue being questioned by prosecutors today.