Trial, Day 11: The elusive bottom line

Though ex-Enron Broadband Services head Ken Rice stuck by his story of misleading company directors, employees and analysts with regard to EBS' failing corporate health Thursday, he said he doesn't remember confronting former Enron CEO Jeff Skilling about the deception. Much of Rice's third day on the stand in the trial of Ken Lay and Skilling was spent under cross-examination by Mark Holscher, one of Skilling's lawyers, who tried to undermine some of Rice's accusations about deceptive earnings reports:

Rice said Skilling asked him to change a planned May 2001 Enron board of directors presentation to make the bottom line more positive and thus misleading. "What I took from meeting with Mr. Skilling was he wanted me to put a presentation together that was more consistent with the analyst conference and less direct on some of the challenges we were facing at EBS," he said. He said he told the board, for instance, that EBS' network was substantially complete when he did not think it was.

But drafts of Rice's presentation didn't show dramatic changes, and a possible early draft was incorrectly dated and seemed so unfinished that Rice agreed all he has to prove the allegation are his recollections.

Rice also "seem[ed] to equivocate some" on whether it was wrong for EBS to sell unused fiber cable to LJM, one of ex-Enron CFO Andrew Fastow's side companies through which he made extra money by dealing with Enron. Rice said Thursday the deal was at market price, but he added that there was no other buyer for the cable than LJM and that investors were made to think the money generated by the sale was from promising business deals rather than a one-time sale of excess material.

The real stunner in Thursday's proceedings was that another witness took the stand. In the trial's three weeks, only two witnesses have completed testimony; the first, former head of investor relations Mark Koenig, testified for several days. The latest witness is Terry West, who began working at Houston Natural Gas, one of the companies that merged to form Enron, in 1981 and has been with the company ever since.

She testified to one oddity — that in 2000 her boss was told by the company's chief accountant, Richard Causey, to have her change the estimated earnings per share for the year to 35 cents from 34 cents. She said the math didn't work out that way, but she changed it on orders.

Prosecutors hope to use such testimony to strengthen their accusations that Enron's executives misled the market to make money for themselves. The court will have a holiday Monday; next week, ex-Enron execs Paula Rieker, who was second in command of investor relations, and Wesley Colwell, former top accountant for Enron's trading unit, are expected to take the stand.