Trial, Day 20: Fastow begins

Everyone expected former Enron CFO Andrew Fastow to deliver some dirt on the company during his first day of testimony in the Ken Lay/Jeff Skilling trial — and he did just that, describing a culture of greed and corruption that he says led Enron to pull all kinds of shady financial deals. Fastow said he thought of himself as a "hero" and indicated he thought his LJM side deals were keeping the company afloat, and he also said Lay and Skilling were directly involved in schemes to articifically inflate Enron's value.

Fastow testified Tuesday that Lay and the board of directors approved his being head of side partnerships called LJM1 and LJM2, after the initials of Fastow's wife and children. Fastow said the structure of the partnerships were legal and they did some legal deals. But he said many of the deals he did with Enron "as general partner of LJM were illegal."

He said his former boss Skilling was fully aware of all his activities, made regular secret oral promises to Fastow to make it all work, encouraged Fastow to do more and warned that they should avoid disclosure to the public.

"Get me as much of that juice as you can," Fastow said Skilling told him when discussing gathering more capital for LJM2. Fastow's first side partnership LJM1 had about $16 million to bail out Enron, his second LJM2 started with $386 million.

Fastow said when he came up with the idea for the LJMs, he described it to Skilling and he said he liked it, but didn't want to let outsiders know. "The biggest risk (was) the Wall Street Journal risk," he said, meaning the risk of information getting out to the media. The partnerships, which helped Enron hide its losses and artificially boost earnings, also netted Skilling more than $45 million — but that wasn't quite enough. Fastow also testified that, at one time, he lied to Enron accountants about how much it would cost to pull out of a contract, and he and his cohorts pocketed the $19 million they got as a result.

The LJMs weren't the only vehicles for side deals: Fastow said there were eventually so many such deals that he made a "global galactic list" of them and went over it with accountant Richard Causey. Causey, Fastow said, got the list approved by Skilling.

Today, Fastow is scheduled to undergo a bit more questioning by prosecutor John Hueston, and then he'll go on cross-examination from defense lawyers. The defense is expected to tear into Fastow, who they contend was responsible for Enron's demise. We're sure he'll keep drawing crowds of "Enron junkies" as long as he's on the stand.