Trial, Day 21: 'I lost my moral compass'

Former Enron CFO Andrew Fastow delivered more goods for the prosecution during his testimony Wednesday and didn't back down from his accusations against Ken Lay and Jeff Skilling despite a full assault from Skilling's lawyer Daniel Petrocelli. In his second day of testimony in the trial of ex-Chairman Lay and ex-CEO Skilling, Fastow told jurors that Lay knowingly misled reporters and employees about the company's health.

Fastow said Lay was given a list of problems at Enron in August 2001, but Lay told Business Week a few days later that the company was in the best shape ever and had no accounting problems. The next month, Fastow said he and Lay met with Goldman & Sachs executives to discuss ways to prevent Enron's financial collapse, then Lay told Enron employees in an online chat that everything was just fine with the company. "It was what Mr. Lay was saying, it was what the company was saying, and I was trying to keep up with the company as well. It was a lie," Fastow said.

In cross-examination, Petrocelli tried to paint Fastow as a man "consumed with an insatiable greed," which Fastow had pretty much admitted Tuesday. Petrocelli also confronted Fastow about how he treated his wife, Lea, who spent nearly a year in prison on a tax charge related to kickback checks Fastow took from his Enron deals. "I believe I was extremely greedy and that I lost my moral compass. I've done terrible things that I very much regret," Fastow said. He said he stole from Enron in two ways: by secretly skimming money from the company and by working with his fellow executives to artifically inflate Enron's worth. "We all benefited financially at the expense of others," Fastow said.

Fastow and Petrocelli also threw some sass during the cross:

Early on, Petrocelli told Fastow that he was going to ask a lot of questions. Fastow looked at the stack of evidence around him and replied: "I can see by the binders." Fastow got a laugh.

Later Petrocelli, often raising his voice, accused Fastow of sounding "rehearsed." Fastow smiled and snapped back that Petrocelli's questions also sound rehearsed.

Petrocelli will finish questioning Fastow this morning, after which Lay lawyer Mike Ramsey will step in to continue the cross-examination.