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Witness Says He Warned Skilling
David W. Delainey, left, with his attorney, testified that he told then-CEO Jeffrey K. Skilling that an accounting move by Enron Corp. "lacked integrity."
(By Carlos Javier Sanchez -- Bloomberg News)
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"Speaking of closed, it looks like we may be looking to beat the street by .02 instead of .01," Colwell wrote in a 2000 e-mail to his then-boss, Delainey. "I understand [then-chief accountant Richard] Causey spoke to Skilling today and this was his preference."
M. Randall Oppenheimer, a lawyer for Skilling, asked Colwell on cross-examination, "Mr. Skilling never demanded anybody do anything inappropriate?"
Colwell replied, "I didn't talk to Mr. Skilling about it."
He was followed on the witness stand by onetime risk analyst Wanda Curry, who said she helped prepare a document showing that many of Enron's biggest contracts to deliver energy to retail customers were in disarray, with $250 million in unreported losses as of late February 2001. Her supervisors met with Skilling to discuss the problem, but she was not in the room, she said.
The document suggested that the unit would have reported a loss for the first quarter of 2001, a loss that would amount to "five times" the amount of income Enron reported during that period.
Weeks after the meeting, Enron announced that it would wrap most of its retail unit into its wholesale trading operations. Through the summer of 2001, both Skilling and Lay told analysts in conference calls that the move helped the company seize efficiencies and that the retail unit was flush with business. Prosecutors argue the move helped Enron bury massive losses.
That was the very same accounting issue Delainey told jurors "lacked integrity." Memorably, he described the retail unit as a "basket case" and showed the jury a June 2001 e-mail containing a joke video clip of a man being struck by a taxi -- what he said it felt like to run the increasingly risky retail business "on an average day." Several members of the eight-woman, four-man jury laughed, as did Skilling and Lay.
Wednesday, Petrocelli bore down on Delainey in a full afternoon of cross-examination that will continue into Thursday, asking why the witness shared vivid details about damaging comments by his superiors only after several meetings with government investigators. He also billed Delainey as an opportunist and a liar bent to save himself.
"We didn't use the word 'crime,' but I tell you in that meeting . . . everybody knew what was going on," Delainey replied. "That was the worst conduct I have ever been a part of."
