Tense exchange at Enron trial

HOUSTON — Enron Corp.’s former investor-relations chief grew tense Tuesday when challenged about his testimony that suggested former CEO Jeffrey Skilling participated in schemes to hike earnings estimates or minimize how much revenue stemmed from asset sales.

In his fourth day of testimony in the fraud and conspiracy trial of Skilling and Enron founder Kenneth Lay, Mark Koenig reiterated his belief that top executives bent on meeting or beating Wall Street earnings expectations made or knew of overnight changes to estimates that he considered suspect.

Failure to meet or beat analysts’ earnings expectations could trigger a drop in the company’s stock price, which Koenig said was all-important at Enron.

He also reiterated that Skilling told analysts that sales of inoperative fiber-optic cable accounted for $50 million in second-quarter 2000 revenue for a highly touted broadband unit when an internal company document distributed more than a week later said the sales accounted for three times that much.

When Koenig first made those statements during testimony for the prosecution, he stopped short of saying Skilling or Lay ordered any fudging of Enron’s numbers or that Skilling knowingly minimized revenue derived from fiber sales.

Skilling lawyer Daniel Petrocelli, in his second day of cross-examination Tuesday, demanded specifics as the matter-of-fact Koenig fidgeted with his tie, but Koenig still couldn’t say unequivocally that his former boss knowingly did anything improper.

Petrocelli planned to continue questioning Koenig today, after which Lay’s lawyer, Michael Ramsey, is expected to get his chance.

Koenig said Tuesday he informed Skilling and former top Enron accountant Richard Causey, on the day before Enron was to announce fourth-quarter 1999 earnings, that analysts had kicked expectations to 31 cents per share from 30 cents. Drafts of earnings press releases showed Enron was to announce earnings of 30 cents per share.