Houston – Former Enron Corp. chief executive Jeff Skilling misled employees and Wall Street about a flailing business unit’s strength in early 2001, but the unit’s former CEO said Wednesday he never corrected his boss.
“No, I didn’t want to talk about that,” Kenneth Rice told Skilling lawyer Mark Holscher in his second day testifying in the fraud and conspiracy trial of Skilling, his former boss and friend, and Enron founder Ken Lay.
“You never once told Jeff Skilling you were uncomfortable with any statement he made to analysts about (Enron Broadband Services), is that right?” Holscher asked.
“Yes,” said Rice, who is among 16 ex-Enron executives who have pleaded guilty to crimes stemming from the government’s investigation of the energy company’s swift tumble into bankruptcy proceedings in December 2001.
Holscher also sought to portray Rice as an out-of-touch manager who didn’t know how many people worked for him.
Rice, once a top trader who ran Enron’s money-losing broad band venture, testified that Skilling told him to characterize layoffs at the unit in early 2001 as “redeployment” so that employees would believe they would keep their jobs and Wall Street analysts who influenced the company’s stock would remain bullish on the weakening venture.
For example, in March 2001 Skilling told analysts the broadband unit had “strong growth as far as people, budgets, the whole thing,” at a time when Rice said workers were being laid off, the unit burned through $100 million per quarter, and efforts to stream video content on a fledgling network and trade Internet bandwidth were flailing.
But Rice acknowledged Wed nesday he never followed up on whether anyone was actually laid off.
