HOUSTON — A top former executive at Enron Corp. said Thursday that he worried whether it was proper for off-the-books financial structures backed by company stock to serve as insurance against losses, but the endorsement of then-Chief Financial Officer Andrew Fastow convinced him to go along with the plan.
The structures, known as Raptors, were "a plot of money we used to manipulate our income statement," David Delainey said in his final day of testimony at the fraud and conspiracy trial of former Enron Chief Executive Jeffrey Skilling and founder Kenneth Lay.
"I was definitely concerned about the Enron stock part of it," said Delainey, who headed the highly profitable Enron wholesale trading unit, Enron North America, before shifting in 2001 to run the struggling retail business segment, Enron Energy Services. "I certainly relied on what I heard from Mr. Fastow at the time."
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Over his three days on the stand as a witness for federal prosecutors, Delainey provided the most damaging testimony in the trial ending its fifth week Thursday. He described the inner workings of Enron as a criminal conspiracy and fraud in which he participated, particularly with Skilling, along with other top company executives.
Delainey testified earlier that he first learned of the Raptors in 2000 and that their architect, then-Enron Treasurer Ben Glisan, offered the structures as a way for Enron North America to avoid booking losses from poor investments.
But Delainey said he found it "odd" because the structures' use of Enron stock for capital meant the company was using its own shares in a way that could influence its income statement.
He said he asked Skilling about it and was told it had been approved.
A lawyer for Lay tried to weaken the jury impact of an employee e-mail introduced at Lay's fraud trial by calling its sender a "nut case."
On Aug. 29, 2001, Margaret Ceconi, a former sales executive in Enron Energy Services, wrote Lay a four-page e-mail detailing claims that the company hid losses by combining its money-losing retail unit with its cash- rich wholesale division, a central charge in the Lay case.
"She was a nut case, wasn't she?" Lay lawyer Michael Ramsey asked while cross-examining Delainey, who led Enron's retail unit and is testifying for the prosecution.
Delainey, 40, agreed Ceconi was a disgruntled employee. He declined to characterize her mental state.
Fastow is slated to testify next week in a much anticipated confrontation with his former bosses.
He pleaded guilty in January 2004 to two counts of conspiracy, admitting to orchestrating schemes to manipulate Enron's reported earnings while skimming millions of dollars for himself on the side. He has already agreed to serve the maximum 10-year sentence for the crimes, with potentially a year and a half off for good behavior.
Fastow's appearance would mark his first public statements about his admitted crimes at Enron and could counter the argument from Lay and Skilling that they did nothing wrong and there was no fraud.