Risk & Compliance

Glisan: Enron Had Sufficient Cash

Lay-Skilling defense continues to suggest that the company was doing fine until short-sellers moved into action and investors made a ''run on the b...
Stephen TaubMarch 27, 2006

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During continued cross-examination on Monday, defense attorneys threw doubt on the testimony of former Enron Corp. treasurer Ben Glisan, who last week said he warned Kenneth Lay about the company’s failing financial health.

During questioning by Lay attorney Bruce Collins, Glisan testified that he told Lay and others at an October 2001 meeting — about a month after the September 11 attacks — that Enron had enough cash on hand to survive a disaster, reported the Houston Chronicle. According to the Associated Press, Glisan told directors that Enron had immediate access to $1.5 billion in cash either in its coffers or from banks, and more was “under consideration by the company.”

Collins connected those statements with minutes of the board meeting; “Company on target to meet year-end goals” was the summary of Glisan’s presentation, according the Chronicle. “The minutes reflect that but I don’t think that’s a complete and accurate assessment,” Glisan reportedly responded.

A critical point, since the prosecution has argued that the defendants misled investors and analysts by inflating the company’s financial strength.

Collins also attacked Glisan’s assertions that on October 23, 2001, he cautioned Lay that “bankruptcy was inevitable” by displaying reports from Glisan detailing improving finances in late September and early October, according to The Wall Street Journal.

In addition, the defense attorney reportedly returned to the “run on the bank” theory of Enron’s demise that Jeffrey Skilling himself used in testimony before Congress — that is, that the company was basically doing fine until short-sellers drove down the company’s share price.

Glisan concluded his testimony Monday afternoon and returned to prison, where he is serving five years after pleading guilty to conspiracy to commit wire and securities fraud.

He was followed to the stand by Glenn Ray, a former Charles Schwab broker. Ray testified about the difficulties surrounding Skilling’s sale of 500,000 Enron shares in September 2001, which prosecutors have used as a basis for insider-trading charges.

Previously, Skilling has maintained that “there was no other reason other than September 11 that I sold the stock,” according to a transcript read into evidence. Ray testified that Skilling — who had left the company the month before — didn’t feel it was necessary to report the sale to the Securities and Exchange Commission and had Enron draft a letter stating that he was no longer an officer of the company. The date of that letter, Ray reportedly asserted: September 10.

Prosecutors are expected to wrap up their case in chief on Wednesday; defense attorneys are scheduled to call their first witness next Monday.