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Enron treasurer's credibility challenged

HOUSTON - The government's last major witness in the Enron fraud and conspiracy trial backpedaled Thursday when grilled about his assertion that former chief executive officer Jeffrey Skilling approved the use of a fraudulent financial structure.

Daniel Petrocelli, attorney for Skilling even challenged ex-Enron treasurer Ben Glisan Jr. on whether the structure was fraudulent.

The defense claims no fraud occurred at Enron other than a few employees skimming money for themselves.

On Wednesday, Glisan testified that when he explained the structure known as a Raptor at a March 2000 meeting of the Enron board's finance committee, Skilling "noted that this is not a deal that he would recommend except for the fact that it allowed him to circumvent the accounting rules."

But Petrocelli noted Thursday that Glisan told a grand jury in March 2004 that Skilling said at that meeting that he wouldn't enter into the Raptor structure "but for accounting rules" that required companies to take losses on assets that declined in value unless they were hedged by such structures, Petrocelli noted.

"He didn't say violated, circumvented or that anything was improper, did he?" Petrocelli asked.

"That's true," Glisan replied.

Glisan also told that grand jury that at the time of the presentation, he didn't think, nor did he assert, that the accounting was "just flat wrong."

"You didn't think the accounting was wrong, did you?" Petrocelli asked Thursday.

"In the end, I did," Glisan replied.

"At the time?" Petrocelli pressed.

"At the time, I worried that it was. I didn't think it would withstand scrutiny of the (Securities and Exchange Commission)."

But Glisan acknowledged he didn't voice that concern to Skilling or directors.

Glisan also said he could not recall any notes, e-mails or other tangible proof that would support his testimony tying Skilling to fraud and conspiracy at the failed energy giant.

He relied only on his memory of conversations to support his claims that Skilling knew of shady goings-on.

"The conversations we talked about yesterday were quite memorable," Glisan told Petrocelli of his Wednesday testimony that Skilling approved a plan for Glisan to create the Raptor financial structures.

Glisan was considered to be a key government witness - the last of eight ex-Enron executives who have admitted to crimes to testify for the prosecution - because of his knowledge of Enron's inner financial workings and his access to company founder Kenneth Lay and Skilling.

Prosecutors expect to call a few witnesses next week - including an insider trading expert to address 10 counts against Skilling - and then rest.

U.S. District Judge Sim Lake had said he would allow a day off from court after that to let the defense teams gear up to present their case.

The judge said Thursday he may let the defense begin April 3.

After court recessed for the weekend, Petrocelli said the defense would start with a few witnesses and then Skilling would testify.

"He's got a long story to tell," the attorney said.

Glisan, 40, the only ex-Enron executive to go straight to prison after pleading guilty to a crime, testified under a prosecutor's questioning Wednesday that Enron's management - including Lay and Skilling - repeatedly misled investors about the company's health by propping it up with fraudulent deals or hiding bad news.

When Petrocelli began cross-examining him Thursday, Glisan was resolute.

Peppering him with rapid-fire questions, Petrocelli asked Glisan if he had "lied all day" Wednesday when he matter-of-factly described such wrongdoing.

"Absolutely not," Glisan said.

Lay lawyer Bruce Collins briefly cross-examined Glisan and was to continue Monday.

[Last modified March 24, 2006, 02:15:43]