Former Enron CFO Andrew Fastow wrapped up his testimony yesterday, maintaining that he and other Enron executives broke the law despite hammering by defense lawyers. It was ex-Chairman Ken Lay's lawyer Mike Ramsey's turn to cross-examine Fastow on Monday, and he repeatedly accused Fastow of exaggerating his testimony to try to make himself look better.
For example, Ramsey pointed to an issue where Fastow said executives at Enron feared that a failed power plant project in India would be overgrown and rusted out by the dense jungle if it were shuttered."What about the jungle encroaching? That's an exaggeration and you know it is!" said Ramsey.
"No sir," said Fastow, adding that he heard the description at meetings with executives, including one in Ken Lay's conference room where Lay was in attendance.
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Ramsey was pushing Fastow to acknowledge that Enron was eager to sell its poorly performing international assets and was not ignoring them.
"You made it up Mr. Fastow, in order to exaggerate," charged Ramsey.
"No sir. I did not," countered Fastow in the most heated exchange yet today.
The story of the Indian power plant came up last week as part of Fastow's testimony about a portfolio of badly performing international assets. Fastow claims Lay deceived analysts and investors by telling them the foreign projects were profitable and growing, even though he knew they were not, in order to keep Enron's stock prices up.
Earlier yesterday, Skilling lawyer Daniel Petrocelli finished his cross of Fastow by going back over the LJM partnerships, which Fastow said he created to help hide Enron's losses and risky investments. Petrocelli tried to convince jurors that creating such side deals to hide losses isn't wrong, saying LJM was "merely a holding tank for poor international assets the company was trying to sell," according to the Chronicle. The only shady activity involving LJM, Petrocelli said, involved Fastow and his associates skimming milions of dollars in personal profit at Enron's expense. Prosecutors contend the partnerships weren't legitimate because Fastow ran them, meaning they didn't have the independence that legal side business deals require.
At one point Monday, Fastow testified about notes he took in October 2001 showing that Skilling was aware of LJM's business deals, which included hiding poorly performing Enron assets.
"You didn't say to him, we were breaking the law; you were in on it with me; we committed fraud together?" asked Petrocelli."I did not say those things, no," replied Fastow, who said he had not yet ''come to grips'' with the illegal activities he was engaged in at Enron.
In a rather bizarre turn Monday, Ramsey seemed to mock Fastow's hearing problem, occasionally yelling at Fastow and once apparently trying to imply that Fastow was only pretending to have trouble hearing:
"You really can't hear me?" an angry-sounding Ramsey shouted."Ask your client — I do have a hearing problem," Fastow replied.
A former employee of LJM is expected to take the stand today. Also due this week is ex-Enron VP Sherron Watkins, who wrote a memo to Lay warning of coming accounting scandals at the company.
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