Jeffrey Skilling challenged assertions by the prosecution that he transferred the trading portion of Enron’s retail division in the first quarter of 2001 to hide $200 million in losses, according to the Associated Press.
On a third day of cross-examination by prosecutor Sean Berkowitz, reported the AP, the former CEO testified that neither he nor other top executives knew that the retail unit was losing money at the time of the asset move.
In earlier testimony, David Delainey — once the head Enron Energy Services (EES), the retail division — told jurors that his division hid $200 million in losses by transferring them to the company’s profitable wholesale unit, Enron North America. On direct examination last week, Skilling insisted that the transfer was made for the sake of efficiencies and to take advantage of the wholesale group’s risk-management expertise, not to hide losses, reported the Houston Chronicle.
The AP noted that after the assets were moved, the wholesale division established a $240 million reserve to cover retail losses. Skilling reportedly asserted, however, that the reserve was actually a conservative contingency just in case losses subsequently arose.
“You have assigned a motive to me, which is, I was worried we would show big losses in EES,” Skilling reportedly stated.
Pressed by Berkowitz about why a reserve was needed if there were no losses to hide, Skilling reportedly responded: “It was my state of mind at the time that EES was more likely to show a profit than a loss. That is my testimony.”
Wednesday morning’s session largely lacked the contentious exchanges between Berkowitz and Skilling that characterized the cross-examination on Monday and Tuesday, observed the Chronicle. The newspaper added the Skilling still seemingly wants to inject a little levity into his testimony, while Berkowitz remains dead serious.