Enron Witness: Skilling's pressure fed stock deception

[Dover]

Feb. 15, 2006, 1:13AM
THE ENRON TRIAL
Witness: Skilling's pressure fed stock deception
Former head of broadband unit says finessing earnings reports was expected


By MARY FLOOD
Copyright 2006 Houston Chronicle

The former head of Enron's broadband business told jurors Tuesday that his mentor and friend Jeff Skilling pressured him to make his division appear to the public to be growing, even while the unit was in fact laying people off and had no revenues.

Ken Rice, a 47-year-old Houstonian, said he repeatedly misled investors about the financial health of the company's Internet business. And he walked the jury through a March 2001 analyst conference call in which he said Skilling also repeatedly misrepresented the faltering division's health.

On questioning by Enron Task Force Director Sean Berkowitz, Rice painted a picture of a pressure-cooker business with a major focus on maintaining the public face of a growing company so that Wall Street investors would bump up the stock price based on hopes for the future.

Rice said Skilling in particular worried the market would drop the price if Enron appeared to be primarily just a risk-taking trading company.

The second witness to take the stand in this case, Rice said he was expected to engage in all sorts of financial contortions to meet the earnings expectations assigned to his division, even though his two alleged revenue-generating businesses weren't generating anything.

"Mr. Skilling would simply say, in fact he did say, 'This is the number, this is what the number is going to be,' " Rice said of the earnings estimate predictions. Rice's testimony focused on Skilling, who he said was a hands-on boss who understood what was happening at Enron Broadband Services....>

http://www.chron.com/disp/story.mpl/front/3660310.html

[napi21]

1. I'm sure that's true!

That kind of thing happens in almost every stock held company in the US! The difference is, ETHICAL accountants will say, "I did the best I could do, and this is the REAL number." I have lost jobs because I refused to compromise my ethics and make entries I knew were wrong.

I guess some who are paid an outragious salary ar just too tempted because they know they aren't worth their salary, and could never get another job making that much, so they just go along, and fudge the numbers.

If you really pay attention to the "stock market" and what the analyists keep saying, you'll understand that those who really control the market are a bunch of greedy b'tds who don't care about truth, but only $$$$$$$$.

Listen to the reports you hear tomorrow. "Company XX reported a profit of 6%, but the stock price went down because Wall Street was looking for 7 1/2%.

Few, if any companies can consistantly maintain a high profit % for months or years, yet they're all pressured to do so.

I can't excuse the accountants for ying or "cooking the books", but I can understand why they do it!