A key witness took the stand this week in the government's fraud and conspiracy trial against former Enron Corp. chairman Kenneth Lay and chief executive Jeffrey Skilling.
Former chief financial officer Andrew Fastow, 44, sat in the witness chair for most of the week, first answering the government's questions in prepared testimony on Tuesday and then undergoing grilling from Skilling's defense lawyer, Daniel Petrocelli, on Wednesday and Thursday. Fastow was expected to close out the week taking questions from Lay's lawyer, Michael Ramsey .
Fastow said Lay never objected when an executive proposed covering up an earnings slump in 2001, and he later elaborated on the point, saying Lay touted Enron's struggling international businesses in at least one conference call with investment analysts. Fastow also testified that in a s eries of meetings after Skilling's August 2001 resignation, Fastow told Lay that the company was facing a $1.2 billion shortfall, as well as $5 billion-to-$7 billion in imbedded losses.
Petrocelli called Fastow's moral character into question, asking pointed questions about a number of side partnership deals that the finance chief reaped millions from and hid from his bosses. One of those deals resulted in criminal charges against Fastow's wife, a former assistant treasurer at Enron. She served a year in prison for filing a false tax return about money the couple received from the partnership.
Skilling's and Lay's lawyers have claimed government prosecutors are seeking to criminalize normal business practices and that the two men were victims of dishonest subordinates such as Fastow. Fastow pleaded guilty to two counts of wire and securities fraud in 2004 and faces 10 years in prison.
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