Trial, Day 13: Pulling no punches

Paula Rieker, the former managing director of investor relations at Enron, stuck to her guns under cross-examination yesterday, maintaining that the company's management gave investors and analysts a false growth story. In her second day of testimony in the Ken Lay/Jeff Skilling trial, Rieker said she "fell into the role of being a good corporate citizen" by turning a blind eye to many Enron practices she thought were questionable — and she wasn't the only one.

On questioning from Lay attorney Bruce Collins, Rieker said others didn't question the story Enron told outsiders or speak up either.

At a board of directors meeting in October 2001, she said, no one questioned whether it was improper to take the $665 million in losses from the retail business and tuck them into the highly profitable wholesale trading section of the company.

"I wish a lot of people had spoken up that wholesale was not reporting its true level of profits and retail was not reporting its true level of profits," Rieker said.

Collins worked to portray the shift in losses as a responsible business decision made because people in the trading business could better handle delinquent retail contracts.

Collins asked Rieker whether she found any documents at Enron to support her concerns about the way the company was doing business and she said she didn't look for any: "[I] didn't feel licensed or empowered to go beyond what had been established as the company message at the time." Rieker testified Tuesday about having confronted ex-Chairman Lay about false statements he was making about Enron's corporate health; yesterday, she said she never told Lay speficially that he was doing wrong, but she repeated that she did try to get him to correct some false statements and he didn't do so.

In his cross-examination, Collins did get some information from Rieker that could help Lay. She said, for example, that information in Lay's optimistic reports on Enron's finances was given to him by subordinates (we guess that means it's OK for corporate chairmen to believe whatever they're told?) and agreed that the failure of the Raptors financial structures, which cost Enron $1.2 billion in equity, was approved by inside and outside auditors and lawyers. Rieker also showed some corporate kindness when Collins asked why she e-mailed ex-CFO Andy Fastow to "hang in there" through a Securities and Exchange Commission investigation into his shady side deals:

"I just have a lifelong training of being nice to people and I didn't feel it was my role to punch Andy in the stomach," she said.

Cross-examination from Collins and Skilling's lawyer Daniel Petrocelli is expected to continue all day today and possibly into next week.