Enron Corp Chief Executive Officer Kenneth Lay urged employees to buy the energy trader's stock in September, a month after being warned about problems with accounting practices, according to a transcript of an online forum with workers.
Lay told employees during the Sept. 26 session that he had "strongly encouraged" company officers to buy more Enron stock.
Lay was responding to questions submitted by workers through the company's electronic message system.
"My personal belief is that Enron stock is an incredible bargain," he said. "We will look back a couple of years from now and see the great opportunity we currently have."
Enron's shares closed that day at US$25.15, a 70 percent decline from the first of the year. Enron filed the largest-ever corporate bankruptcy on Dec. 2, after it couldn't get loans to finance daily operations. The company's cash dried up amid allegations it used affiliated partnerships to hide losses and debt.
The forums were held regularly between Enron executives and employees, company spokesman Eric Thode said. He said the transcript is authentic and referred further questions to Lay's Washington attorney, who couldn't be reached to comment.
During the forum, Lay blamed the company's fall in share price on traders spreading rumors because they were hoping the price would fall. He encouraged employees to "talk up the stock and talk positively about Enron to your family and friends."
In August, Enron Vice President Sherron Watkins had warned Lay that the company might "implode in a wave of accounting scandals."
Her warning was disclosed this week in a letter obtained by the House Energy and Commerce Committee.
The forum transcript was posted on a Web site by Washington lawyer Eli Gottesdiener, who has filed a lawsuit against Enron on behalf of employees who lost their savings in the company's 401(k) account.
Throughout the transcript, Lay answered numerous questions about the decline in Enron's share price, and admitted that morale had fallen at the company.
"The company is fundamentally sound," he said. "The balance sheet is strong."
Later he said the "third quarter is looking great. We will hit our numbers."
On Oct. 16, Enron took a US$1.01 billion charge related to writing down some investments, and announced that shareholder equity had shrunk by US$1.2 billion.
One employee noted concern about the so-called "special-purpose vehicles," or partnerships, that Enron used to keep debt off the company's balance sheet, and whether advice from the company's auditor, Arthur Andersen LLP, could be trusted. The partnerships were "legal and totally appropriate," Lay said. Later, he said many of the partnerships were approved by Andersen's local office and at the auditor's Chicago headquarters.
Enron fired Andersen yesterday after the accounting firm admitted that its employees destroyed Enron-related documents and e-mails. On Tuesday, Andersen fired David Duncan, the partner who oversaw Enron audits, for ordering the destruction of records.
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