Last Chance To See 600 sq mi: Hidden
Missed Connections: Gefilte Fish...and "Chain Connections"
H-Town Rock
Rock Talk, Vol. IX
Wednesday's installment of the Ken Lay/Jeff Skilling trial focused on Sherron Watkin's memo to Ken Lay warning of an impending financial meltdown at Enron — a memo a Houston lawyer called nothing more than "office gossip."
Max Hendrick III, a partner at Vinson & Elkins, said he and V&E partner Joe Dilg took a "responsible and reasonable approach to addressing Ms. Watkins' concerns" as they discussed the memo with Enron executives at the request of ex-Chairman Lay and Enron General Counsel Jim Derrick. Hendrick said Lay and Derrick wanted a quick investigation, so they didn't ask an outside accounting firm to participate — and that was just as well, because V&E did more than $35 million a year in business with Enron and wouldn't have been objective enough for a full probe anyway. Hendrick said he felt Arthur Andersen could review whether its own work was correct; bringing in outside accountants could have alientated Andersen and drawn unwanted media attention. Well, we suppose that ship has sailed.
Hendrick said he didn't contact everyone Watkins mentioned in her memo, but he did talk with four people she said were essential and he asked former CFO Andy Fastow and former lead accountant Richard Causey is they knew about any problems with illegal oral side deals that benefited Fastow. Presumably, they said they didn't; both men have since pleaded guilty to Enron-related charges. Prosecutor John Hueston stressed that Hendrick didn't talk to executives who had left Enron, including Skilling, because he wanted to keep the investigation in-house.
Also on the stand Wednesday was Derrick, himself a former V&E partner. He said he was "astonished" to learn that Fastow had been stealing from Enron because he thougth Fastow was a hard-working guy and he knew he made tons of money. Derrick discussed some internal processes at Enron, including reviews of Fastow's LJM side deals. He said the reviews found that the side companies, which ended up bringing Fastow millions of dollars, had legitimate purposes as opportunities for capital and as partners with which Enron could close deals quickly since Fastow had knowledge of negotiated deals.
Derrick is expected to finish his testimony this morning; Skilling will be the next witness to take the stand.
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