Not that his comments haven't already been endlessly dissected by major news media over the last day-and-a-half. But in case you missed, well everything for the last 24 hours - here goes:

Kenneth Lay knew of Enron's troubles, Fastow says

By Alexei Barrionuevo and
Vikas Bajaj The New York Times
Via The International Herald Tribune
THURSDAY, MARCH 9, 2006

...Enron filed for bankruptcy in late 2001, setting off numerous investigations, including the four-year federal investigation that culminated in the trial of Lay and Jeffrey Skilling, Enron's former chief executive, now in its sixth week. The men are accused of fraud and conspiracy...

..Andrew Fastow [Enron's] finance executive, said he briefed Lay, who was then chairman, about the "serious problems" at the company in the summer and autumn of 2001, and the two jointly met with investment bankers to explore a restructuring, sale or merger of Enron...Fastow, who created the numerous off-balance-sheet partnerships designed to hide Enron's liabilities and bolster its reported earnings, is one of the government's star witnesses in the trial. On Tuesday, he strongly pointed the finger at Skilling, saying that he had approved of and directed Fastow's use of the partnerships to hide troubled projects and investments from investors.

Questioned for a second day by the prosecutor, John Hueston, Fastow detailed on Wednesday a series of meetings between himself, Lay and other executives in the late summer and autumn of 2001 after Skilling had left the company citing personal reasons. "I told Mr. Lay we had $5-to-$7 billion of embedded problems," Fastow said about a meeting a few days after Skilling left in August 2001. "Even if we are smart enough and don't make a mistake for five years, it would take us that long to work ourselves out of our problems."

Fastow said that he recommended hiring Goldman Sachs to help Enron pursue a restructuring, and that he and Lay met with bankers from the New York- based investment firm a few weeks later. Fastow said he recommended Goldman because the firm was not lending Enron money at the time, unlike many other Wall Street firms, which might have cut off their loans to Enron if they realized how severe its problems were.

Prosecutors displayed notes that Fastow made at the time listing the growing financial problems at the company's energy trading, broadband and international divisions. Fastow has pleaded guilty to fraud charges and agreed to a 10-year sentence in a plea deal with the government. By late 2001, reporters and Wall Street analysts had started raising pointed questions about the numerous partnerships that Fastow had created and profited personally from.

But in interviews, meetings with analysts and messages to employees, Lay deflected such questions and said the company was in fine health. "The company is fundamentally sound," Lay told employees in September 2001. "The balance sheet is strong." Fastow, however, testified that the company was scrambling to meet its earnings projections for the third quarter and had a shortfall of $826 million. The company covered a part of that gap by using accounting reserves, Fastow said...

More here.

-- MDT

Labels: Andy Fastow, Enron