Skilling and Lay get thrown under the bus again

This week it was the former managing director of investor relations and corporate secretary:

The spotlight was largely on former Enron Chairman Ken Lay today as a former company executive accused him of repeatedly misrepresenting the company's financial health to investors, analysts and even employees.

Paula Rieker ... told jurors that in one case she even corrected Lay and he still continued to misrepresent the truth about Enron's retail business. ...

"I told Mr. Lay a significant amount of the earnings came from the sale of stock by Enron Energy Services and not from core activities," Rieker said, meaning it was one-time revenue that did not indicate EES was strong. She said Lay did not change his pitch. ...

She said she was "very bothered" by the company decision to continue to make EES look like a growth story in 2001 by shifting its losses to the more profitable trading division. She said when she complained, her boss (Mark) Koenig (who has previously testified for the prosecution) said "'You may not agree with it, but your job is to deliver the company message.'"

Rieker said she saw Lay mislead analysts by pretending not to know the name of the financial deal called Raptor that was unwound at a $1 billion hit to shareholders equity. She said Lay also misled analysts about why the company stopped charting the future contract value of the retail division.

...

One of the most dramatic moments of the day may have been one of the least significant legally.

Lay isn't charged with insider trading or with stealing from the company as it went into its death spiral. But prosecutor (John) Hueston showed a timeline including troubles at Enron in October and November 2001 that contrasted the company's ills with Lay's drawing millions out in cash.

While the timeline focused on things like the pension plan closing to employees who wanted to move stock, the cancellation of the holiday party, the failure of the Dynegy merger, it also showed Lay withdrawing $1 million here or $2.5 million there in cash from a revolving loan account with the company approved by the board in better times.

Lay withdrew $1 million the day the Dynegy deal died, which was the last hope of keeping Enron out of bankruptcy court. Lay's lawyer Bruce Collins asked Rieker on cross-examination if that amount wasn't just a drop in the bucket when hundreds of millions of dollars were being called in by Enron creditors at the same time but she said "No sir."

Rieker recalled for jurors how in February 2002 the board of directors was presented with a report that included Lay's stock sales for 2001, the year the company came apart.

"I learned that Mr. Lay had been selling stock back to the company in return for cash in excess of $70 million," she said. When Hueston asked about how the board of directors reacted, Lay's lawyer objected several times.

"They were outraged," Rieker finally answered.

Asked if she could recall what any specific board member reaction, Rieker said, "John Duncan exclaimed that 'Mr. Lay was using Enron as a damn ATM machine.'" By the time Rieker repeated that, because of an objection in mid-sentence, it appeared every juror was taking notes.

Rieker also bolstered some of the testimony given by Koenig about Skilling's involvement in altering earnings reports before they were made public.

She said she understood that in January 2000 and again July 2000 that Skilling ordered that earnings per share be increased. In January, she said it was done virtually overnight when they realized analysts were estimating earnings at 31 cents, rather than the 30 cents Enron almost reported.

In July 2000, she said, her boss told her Skilling ordered the earnings be raised a couple cents over the 32 cents they had planned. She said analysts and investors were told it was strong underlying performance that caused the hike to 34 cents.

The truth, she said, "would have really hurt the credibility of Enron and it would have hurt the stock price."

I took a bit more than the usual liberty with that excerpt because it reflects so clearly the simply bottomless hubris of Kenny and Jeffrey. Besides the usual "what made these men think they could get away with this" has to be "what did they think their former underlings were going to say once they had made a plea deal with the Feds"?

It's really too bad they can't get life in prison, isn't it ?

(I'm not a death penalty advocate.)

What it will be like ordering a pizza in 2010

Click here and turn your speakers up (it's work-safe).

Primary Endorsements

Vince Leibowitz and Charles Kuffner and Greg Wythe and Eddie Rodriguez have posted theirs; mine follow (in the contested races) :

US Senate -- Barbara Ann Radnofsky

Governor -- Chris Bell

Lt. Governor -- Ben Z Grant

Agriculture Commissioner -- Hank Gilbert

US Congress, 1st -- no preference

US Congress, 7th -- Jim Henley and David Murff both earn my endorsement. The constituents of the Seventh Congressional District would be well served by either man.

US Congress, 10th -- Ted Ankrum

US Congress, 28th -- Ciro Rodriguez

Texas House, District 140 -- no preference

Texas House, District 146: Borris Miles

Texas House, District 147 -- Garnet Coleman

And it's not a contested primary, but you all ought to know who I support for Texas Attorney General by now. I'll add links to other blogland endorsements as I find them, and if anyone wants me to explain my picks, ask me in the comments.

Update: Stace Medellin adds his dos centavos. Nate chimes in. LFT and Cincinnatus have some pointed remarks on the governor's race, from opposite perspectives.

Update: I really should revise my "no preference' in CD-01 to recommend whom you should not vote for, and that is Roger Owen. He is apparently an unmitigated homophobe and more than a little flaky, and isn't worthy of support.

Update (2/22): Abram gets up on his soapbox. Fred injects the truth serum. Just Another Matt gives us his.

Pot Luck (contains no gamebird)

I'm going to mosh a few random unconnected items together into a sheperd's-pie of a post:

-- NBA All-Star-weekend in Houston concludes with the basketball game this evening, and the bacchanalia got so out of control around the Galleria yesterday that HPD closed several exits on the 610 Loop and likewise blocked cars from entering at-capacity parking garages until the revelers unclotted.

"The revelers" is probably an understatement. This was entourages in fleets of stretch limos gridlocking intersections at every single restaurant, club, luxury high-rise condo and entrance to Neiman Marcus.

At three o'clock in the afternoon, and lasting deep into the evening.

(In the interest of full disclosure, the two Houston Chronicle reporters on this story -- fresh off the debutante beat -- also implicate marauding President's Day shoppers in the traffic jam.)

-- Mardi Gras is a bit of a letdown this year, both in N'Awlins and in Galveston (there because of the Crescent City's downsizing, here because of unusually cold weather for February).

-- Dick Cheney's gunshot victim, upon release from the Corpus Christi hospital where he spent the past week, apologized for all the trouble he's caused the Vice President. The birdshot pellets lodged in Harry Whittington's heart and liver, each through their representatives, also issued statements of regret for the incident.

In other news, asbestosis victims offered Halliburton a heartfelt mea culpa for breathing on the job.

-- Early voting in Texas begins tomorrow and continues (almost) all the way to March 7. A spirited Democratic primary up and down ballot features several contested races, the most focus being on the two candidates for Governor, Chris Bell and Bob Gammage. Latest poll numbers here. If there happens to be a runoff -- incumbent Republican Rick MoFo'n Goodhair has a handful of erstwhile challengers, including this kook from his right (go look; he's got a picture of a bloody baby on the home page) -- then the Kinkster and Grandma (pronounced 'Gran-Maw') have to wait another thirty days before collecting signatures.

Regarding the Dems, the Chronic snorts itself awake for a moment, then rolls over and snores loudly.

-- Cindy Sheehan will have a tea party for Barbara Bush -- the GranMaw, not the hottie -- here in Houston tomorrow also.

Update (2/21): More on the Galleria shopping orgy here. Untold by the Chronic in any report were the rumors of shopping mall security squaring off on limosine drivers refusing to move, steadfastly unwilling to inconvenience their VIPs. Police had to intervene (allegedly). And Lyn has pictures of Cindty Sheehan in Babs Bush's backyard yesterday.