Trial, Week 7: Wheeling and dealing

As we enter the seventh week of the trial of ex-Enron Chairman Ken Lay and ex-CEO Jeff Skilling, the Chronicle takes a look at some of the iffy investments Enron made before it imploded. The foreign energy deals weren't nearly as stable as Enron execs indicated, but most of them are still operational — though, as the Chronicle notes, it's not clear how well they're doing today.

Prosecutors have focused on four international power projects: power plants in India and Brazil, a Brazilian power distribution system and power-producing barges in Nigeria. Former Enron CFO Andrew Fastow testified last week that the Brazilian projects and the plant in Dabhol, India, were considered "troubled," and Fastow's LJM side partnerships held interests in the projects that Fastow said were meant to help mask uncertainty in Enron's finances. Fastow said the Cuiaba Integrated Project in southwestern Brazil, in particular, was a major risk, but executives told the Enron board it was part of a "a large and fast-growing energy market." The other Brazilian project, the Elektro Eletricidade e Servicos power distribution project in Sao Paulo, was worth less than half what Enron told the public in summer 2001, Fastow said. But Lay never let on: In an October 2001 conference call with analysts, he said, "It's not a bad asset. It's a good asset, just like a lot of other assets in that portfolio." Fastow testified that 80 percent of the portfolio was considered "troubled" at the time. The two Brazilian projects are owned by Prisma Energy International, which emerged from the Enron bankruptcy; the Indian plant is closed; and AES Corp. now runs the Nigerian barges.

In other news, both the prosecution and the defense have used Fastow's wife, who served a year in jail for a crime related to Fastow's dealings: The prosecution used her to get him to plead guilty, and the defense has used the Fastows' relationships to try to make Andrew Fastow look like a jerk on the stand. The NY Times and the Birmingham News note former HealthSouth CEO Richard Scrushy's stop by the Enron courtroom (he, as expected, doesn't think much of Fastow's kind of testimony).

Today, Lay lawyer Mike Ramsey is expected to spend about half the day today cross-examining Fastow. The next witness will be a former employee of one of Fastow's LJM side companies.