Last Chance To See 600 sq mi: Hidden
Missed Connections: Gefilte Fish...and "Chain Connections"
H-Town Rock
Rock Talk, Vol. IX
Former Enron Treasurer Ben Glisan Jr. continued his testimony in the Ken Lay/Jeff Skilling trial yesterday, telling jurors about more cases in which the ex-Enron chairman and CEO misled investors and analysts about the company's faltering health in the months leading up to its collapse. Glisan's testimony could do a lot to undermine Lay and Skilling's defense, which is built on the notion that the company imploded because of a "run on the bank" after news came out of former CFO Andy Fastow's crooked ways.
Such a run on the bank was inevitable, Glisan said, but not just because of Fastow: He testified that Enron officials hid losses, kept assets overvalued, gave good reports about failing businesses and ran a huge debt — and analysts were starting to figure things out. Those were the kind of problems that led Glisan to design the Raptor financial vehicles to hedge some of Enron's investment and "help Enron avoid losses that it should have taken."
Glisan said he worked through the idea with Skilling and when they presented it to a finance committee meeting in May 2000 "Skilling said this was not a deal that he would recommend except for the fact that it allowed him to circumvent the accounting rules."Glisan told Ruemmler that upon learning about the financial structures Lay "giggled."
"In what way?" Ruemmler asked.
"In delight," Glisan said.
Ken Lay giggled? That brings to Houstonist's mind a rather unsettling parallel between Lay and Montgomery Burns.
Glisan also testified Wednesday that, near the end of the third quarter of 2001, Lay told him to approach credit rating agencies to find out how much of Enron's overvalued assets the company could admit to without losing its credit rating. Glisan said he found out Enron could only write off about $1 billion, but company officials asked him to "get more."
"That's backwards," Glisan said. "What should occur is we should take the charges that we needed to take and then deal with the consequence with rating agencies and investors."
Analysts weren't the only ones who knew about Enron's troubles, though, Glisan said. He talked about a September 2001 management meeting in which executives talked about losses, overvalued assets and the improper use of reserves; wholesale trading exec John Lavorato even said "he was glad we didn't have a gun or he would shoot himself," Glisan said. And yet, he said, Lay left the meeting and told analysts, investors, employees and credit agencies that everything at Enron was just fine.
Glisan's testimony apparently rubbed Lay the wrong way. As the ex-chairman left the courtroom for an afernoon break, he told reporters, "I've never heard so many lies in one day in my life, and you can quote me on that!" And, of course, they did.
Defense cross-examination of Glisan is scheduled to begin today.
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