Skilling: I didn't know

Former Enron Corp. Chief Executive Jeffrey Skilling told skeptical lawmakers Thursday he left his job in August believing the energy trading giant "was in no peril" and said he did not know about the dire financial state of the partnerships that brought down the company.

Skilling was the star witness at an eight-hour congressional hearing during which four former and current Enron officers invoked their 5th Amendment right against self-incrimination. He said he was unaware that former Chief Financial Officer Andrew Fastow and others had participated in the partnerships, netting millions of dollars.

Skilling's testimony before a subcommittee of the House Energy and Commerce Committee contradicted that of other Enron officials. They said Skilling had been warned about the partnerships and had failed to carry out an assignment from the company's board of directors to make sure the partnerships were being run properly.

The current president and chief operating officer of Enron, Jeffrsey McMahon, testified that he told Skilling on March 16, 2000, about his concerns regarding Fastow's conflict of interest in running the partnerships.

"[Skilling's] parting words were that he understood my concerns and would remedy the situation," McMahon said. But he said nothing was done, and McMahon, who had been Enron's treasurer, was reassigned to another job.

In his opening statement, Skilling said he was "devastated by and apologetic" about what had happened at Enron and what the company has come to represent.

But he said he took no responsibility for its collapse, saying Enron was profitable when he left. Instead, he said, the company went into bankruptcy because it ran into cash-flow problems and a "classic run on the bank" climate developed.

Earlier in the day, Fastow and the three others exercised their 5th Amendment right not to testify. But Skilling said he wanted to tell his story.

Republicans and Democrats on the House panel said his account strained credulity.

"Mr. Skilling, a massive earthquake struck Enron right after your departure," said Rep. James Greenwood (R-Pa.), the subcommittee chairman. "People in far inferior positions to you could see cracks in the walls, feel the tremors, feel the windows rattling. And you want us to believe that you sat there in your office and had no clue that this place was about to collapse?"

Skilling replied: "On the date that I left the company, I had every reason to believe it was financially stable."

Rep. Bart Stupak (D-Mich.) added: "Earlier witnesses put it that you were intense, hands on. From what I've heard from your testimony today, you don't know what was going on."

Congressional investigators and a special Enron investigative committee appointed by the board have said the firm used off-the-books partnerships to conceal debt on Enron's balance sheets and inflate profits, hiding the energy giant's true financial condition.

Investigations under way

The Justice Department has opened a criminal investigation of Enron's failure, and the Securities and Exchange Commission and Labor Department also are probing the company.

Several committees on Capitol Hill are investigating the company's collapse.

When the company filed for bankruptcy Dec. 2, many Enron employees and retirees lost their savings tied up in company stock. But many company executives had cashed out their own holdings before Enron went into its plunge.

The panel grilled Skilling on whether he knew about Fastow's activities with the so-called LJM partnerships. A special committee appointed by Enron's board of directors concluded the partnerships were propped up by Enron's own stock and lacked sufficient outside investment.

Fastow earned $30 million in investments from the partnerships that he supervised while serving as Enron's chief financial officer.