Witness: Enron ‘fast and loose with rules’

HOUSTON — A second Enron Corp. executive testified Tuesday that the company illegally dipped into reserves to meet and beat earnings targets under pressure from then-chief executive Jeffrey Skilling.

“It was standard operating procedure,” said David Delainey, former chief executive of Enron’s profitable wholesale trading franchise, during the fraud and conspiracy trial of Skilling and Enron founder Kenneth Lay. “At Enron in Houston, we tended to be pretty fast and loose with our rules,” he said.

Delainey, under questioning by prosecutor Kathryn Ruemmler, said he met with Skilling in the second half of 2000 to discuss how his business unit, Enron North America, had easily met and exceeded its earnings targets, primarily by cashing in on the volatility of energy markets and through deals with California utilities.

“I said we had a couple of quarters in our pockets that would give us flexibility in the future,” he said. “I wanted to make sure he was aware we were doing really well.”

Skilling was so pleased he gave Delainey a hug, he said.

Delainey said top executives often called upon the trading unit to fill earnings gaps left open by other divisions that didn’t meet their targets.

“Many times we would get that call, particularly from Mr. Causey,” he said, referring to Richard Causey, Enron’s former chief accounting officer.