A House committee released documents Thursday suggesting former Enron Chief Executive Officer Jeffrey Skilling appeared to have knowledge of the company’s perilous financial condition before he resigned.
Skilling testified before the House and Senate that he considered Enron Corp. to be in good financial shape when he left his post in August.
In sworn testimony, he told lawmakers he was unaware of the troubled state of the company’s partnerships that were a main factor in Enron’s collapse.
The House Energy and Commerce Committee released summaries of interviews with three former Enron executives, including its top auditor, Richard Causey, indicating Skilling was familiar with transactions by the partnerships that Enron allegedly used to hide its debt and inflate its stock price.
In another development, Pat Wood, head of the Federal Energy Regulatory Commission, disclosed that he met or spoke with Enron executives at least nine times since 1996. Wood, an energy regulator in Texas while President Bush was governor, took over as chairman of the commission in June.
Called by Kenneth Lay
Wood said he had toured Enron’s trading floor and discussed deregulation questions with the firm. He also said Enron Chairman Kenneth Lay called him Nov. 8, but Wood did not return the call. He said he had met with Enron officials twice since taking the federal job. Wood said he spoke at an energy conference hosted by the firm and discussed pipeline security matters with the company after the Sept. 11 attacks.
His previous contacts with Enron officials included Skilling, he said. Rep. Henry Waxman (D-Calif.), who requested the information from Wood, sent a follow-up letter Thursday asking for more details.
In its letter, the Energy and Commerce Committee, headed by Rep. Billy Tauzin (R-La.), asked Skilling to respond to seven questions about his awareness of the partnership transactions as described in the three interviews conducted by attorneys for a special investigative committee appointed by Enron’s board and headed by Dean William Powers of the University of Texas law school.
For example, referring to special partnerships called Raptors, Causey told the committee he was “certain that he told Skilling about the shortage in the Raptor vehicles and made Skilling aware that Causey was working toward a solution. When they found what Causey felt was a solution, Causey sought and obtained Skilling’s approval.”
The Tauzin panel wanted to know if Skilling had any reason to doubt Causey’s version of events or those of the two other officials interviewed by the Powers committee. Causey invoked his 5th Amendment rights against self-incrimination when he was called to testify before House members.
Enron set up the Raptor partnerships to use futures derivatives contracts to hedge against potential declines in the value of its many investments, but the company used Enron stock to fund the partnerships. According to the Powers committee, the partnerships ran into trouble in 2000 and 2001 as the value of both Enron’s stock and its many investments fell.
As a result, the Raptors developed a shortage of credit capacity to pay Enron back for its hedges, according to the Powers committee. To prevent these financial losses from being reported on Enron’s own balance sheets, they were restructured in early February 2001 while Skilling was chief executive.
Another Enron official, Ryan Siurek, identified as the senior director for transaction support, told the Powers committee that he had no doubt “Skilling knew about the Raptors’ credit capacity problems and about the restructuring.”
According to the Powers committee’s account of his interview, Siurek said he had been told by another Enron officer, Ben Glisan, that Glisan had spoken to Skilling about the Raptors’ financial problems during the first quarter of 2001.
`Congratulated’ by Skilling
When the restructuring of the Raptors was completed, Siurek said, Skilling called him to congratulate him. “Skilling stated he appreciated Siurek’s hard work,” the account of his interview said. Skilling indicated the transactions would be good for the company, and his comments “gave Siurek the impression that Skilling knew the financial aspects of the transactions.”
The Tauzin panel asked Skilling to respond to Siurek’s version of events as well as those of a third Enron official, Rodney Faldyn, an accounting supervisor who reported to Causey.
Faldyn, in his interview, said Causey told him Skilling was aware of Raptor credit problems and that losses in the two most troubled ones amounted to about $350 million in the first quarter of 2001.
More Top Picks Best Field Watches For Men
Faldyn’s interview also indicated that Andersen, Enron’s outside accounting firm, was closely involved in setting up Enron’s partnerships. He and others often attended meetings about the partnerships in Andersen’s Chicago headquarters, he told the Powers committee.
“It was routine for Enron to articulate the business purpose of transactions for Andersen’s audit purposes,” according to the Faldyn interview.