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Enron Executives in Tense Day Of Congressional Testimony - 2002-02-08

Two executives of Enron Corporation offered conflicting testimony about their firm's collapse to a congressional panel probing the largest bankruptcy in U.S. history. Four other executives refused to testify.

The tense day-long hearing focused on a series of business partnerships set up by Enron's former chief financial officer Andrew Fastow.

An internal company probe shows that the partnerships hid huge debts and losses from employees and stockholders, while Mr. Fastow made tens of millions of dollars running them.

Mr. Fastow and another former executive refused to testify before a House Commerce and Energy subcommittee Thursday, citing their constitutionally protected right against self-incrimination. Two current executives also invoked their right to remain silent.

But Enron's new chief operating officer, Jeffrey McMahon, did testify.

Mr. McMahon said he expressed concern about the partnerships in early 2000, when he was treasurer of the company. He said he raised the issue with then-chief executive Jeffrey Skilling. "At the end of the meeting, Mr. Skilling indicated to me that he understood my concerns and he would try to remedy the situation," he said.

Mr. McMahon said Mr. Skilling called him shortly after the meeting and offered him a job elsewhere in the company. For his part, Mr. Skilling, who resigned last August, denied knowing there were any financial problems. "While I was at Enron, I was not aware of any financial arrangements designed to conceal liabilities or inflate profitability," he said.

Mr. Skilling attributed Enron's collapse to what he called a classic run on the bank, a liquidity crisis spurred by a lack of confidence in the company.

Subcommittee Chairman James Greenwood, a Republican from Pennsylvania, turned to Mr. Skilling and suggested either he or Mr. McMahon had been lying under oath and thus could be subject to criminal charges. "When all is said and done, I can believe him, or I can believe you, but there is no way in hell I can believe both of you," Mr. Greenwood said.

Congressional hearings into Enron's collapse continue next week, when the company's former chairman Kenneth Lay is to appear before two committees. The panels subpoenaed Mr. Lay after he refused to voluntarily testify this week.