Enron's chief executives concealed key data before the company's 2001 collapse that would have shown that two supposedly fast-growing businesses were "underperforming," a witness testified.
Mark Koenig, who was head of investor relations at Enron, said on Thursday that former chief executives Kenneth Lay and Jeffrey Skilling failed to tell the truth about the woes of Enron's ventures into energy management and high-speed Internet.
Koenig, the first witness in the fraud and conspiracy trial of Lay and Skilling, said assurances from the chief executives masked major problems.
He said top management approved a plan to transfer hundreds of millions of dollars in losses from Enron Energy Services, which managed energy operations for corporate clients, to a profitable division where the losses would not be noticed.
The division "wasn't performing very well ... primarily because of the loss we had mentioned," Koenig testified.
He said that internal Enron documents showed the unit lost US$230 million in the first quarter of 2001 and US$726 million in the first six months of that year because of bad bets on commodities, including energy prices.
"Disclosing that one of Enron's fast-growing, highly valued business units ... had accumulated losses of US$230 million ... would have been a disaster had investors taken that into account," he said in response to a question from federal prosecutor Kathryn Ruemmler.
Koenig said another newly created division called Enron Broadband Services had few revenues other than those from deals with entities created by Enron itself and from one-time sales, but that these details were kept hidden.
"In my view [the broadband unit] was underperforming too," Koenig said.
The witness said comments by Skilling during the time he served as company president and CEO were often misleading to analysts and investors.
Koenig said Lay, who resumed the post of CEO after Skilling's resignation in August 2001, made similar comments.
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