Defense Hits Enron Witness's Credibility

Defense attorney Daniel M. Petrocelli cross-examines Ben F. Glisan Jr., former Enron Corp. treasurer. Petrocelli accused Glisan of
Defense attorney Daniel M. Petrocelli cross-examines Ben F. Glisan Jr., former Enron Corp. treasurer. Petrocelli accused Glisan of "criminalizing" remarks by former chief executive Jeffrey K. Skilling (By Pat Lopez -- Bloomberg News)

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By Carrie Johnson
Washington Post Staff Writer
Friday, March 24, 2006

HOUSTON, March 23 -- The prosecution's last major witness in the fraud trial of Enron Corp.'s former leaders endured six hours of hostile cross-examination Thursday, but former treasurer Ben F. Glisan Jr. insisted that the company's financial problems were mounting even as then-Chairman Kenneth L. Lay displayed optimism to the public.

"What we were telling banks, rating agencies and investors was inconsistent with economic reality," Glisan said.

Glisan, 40, provided some of the most compelling evidence to date against Lay and former chief executive Jeffrey K. Skilling in a confident turn on the witness stand under questioning by Assistant U.S. Attorney Kathryn H. Ruemmler. On Wednesday, he vividly described a company so unsettled by billions of dollars in losses that one executive said during a bleak September 2001 meeting that "he was glad he didn't have a gun, or he would shoot himself."

Lay discussed the company's "dire" financial condition internally but misrepresented its troubles to shareholders and employees, whom he told the company was "fundamentally strong" weeks after that meeting, Glisan testified. He claimed Skilling knowingly worked to circumvent accounting rules in a May 2000 deal and that Lay "giggled . . . in delight" at the approach.

Discrediting Glisan, described as the "cleanup hitter" and "closer" by Skilling lawyer Daniel M. Petrocelli, is paramount to the defense case. Prosecutors used Glisan to remind the jury of their central allegations and to corroborate testimony by more personally tainted witnesses, including former finance chief Andrew S. Fastow. While Glisan shifted in his seat, repeatedly sought to clarify statements by Petrocelli and sometimes laughed in frustration during cross-examination, he did not lose his composure. However, he did retreat from some of the language he used to describe Lay's and Skilling's actions.

The former Enron executive already has endured much worse than a combative cross-examination. He pleaded guilty to a single conspiracy charge in September 2003 and moved directly into prison, where he has spent 2 1/2 years. In some of the starkest testimony in this eight-week-long trial, Glisan talked about the two weeks he spent in solitary confinement and of his fears of being branded a "snitch" and facing physical threats from other prisoners. He will be eligible for release into home confinement in September.

Petrocelli hammered away Thursday at the central themes of the defense case. He accused Glisan of shading his testimony to win perks from the government, including half a dozen furloughs that allow him to spend time with his wife and two children. He pointed out that Glisan had no explicit notes or recordings implicating Skilling or Lay, just his own recollections. And he noted that Glisan had failed to win a deal with the government earlier because prosecutors doubted his credibility. Glisan previously acknowledged that during his tenure at Enron, he had improperly accepted $1 million on a fraudulent deal in which he invested less than $6,000.

In one passionate exchange, Petrocelli accused the witness of "criminalizing" remarks Skilling made about the accounting benefits of a business partnership in 2000. Defense lawyers told the eight-woman, four-man jury in opening statements that Enron was essentially a healthy business that collapsed amid a market panic fed by vindictive media and short sellers.

"I don't know that he used the word 'circumvent' but the take- away was . . . the only reason to do it was an accounting benefit," Glisan said.

"He didn't say that in front of anybody," the defense lawyer said.

"He didn't say it in that way," Glisan replied.

"I'm asking the questions," Petrocelli shot back.

The Associated Press reported that Lay lawyer Bruce Collins briefly cross-examined Glisan and was to continue Monday. He started off by challenging the former treasurer's assertion that Lay "giggled . . . in delight" after then-Chief Accounting Officer Richard A. Causey explained that a particular approach carried "accounting risk," but outside auditors had approved it. "I've gotten to know Mr. Lay pretty well. He may chuckle, but he doesn't giggle," Collins said. "I concede chuckle as opposed to giggle," Glisan said.

Testimony by Glisan, who had been known inside Enron as a "boy scout," merely underscored the importance of two crucial witnesses to come. Both Lay and Skilling are preparing to make their own case to the jury sometime after the defense case begins next week.

"You're going to see 'em early and you're going to see 'em often and you're going to see 'em for a long time on the stand," Lay's lawyer, Michael W. Ramsey, said outside the courthouse Wednesday.


© 2006 The Washington Post Company

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