Key Enron figure turns against former bosses

A key figure in the Enron bankruptcy has reached a plea deal with prosecutors that seems bound to strengthen the government's fraud case against Kenneth Lay and Jeffrey Skilling, the company's former chief executives.

Richard Causey, former chief accounting officer of the fallen energy giant, was due in court in Houston yesterday to plead guilty to reduced charges, in return for testifying against Mr Lay and Mr Skilling, with whom he was originally a co-defendant. The trial of the two was scheduled to start on 17 January, but now seems certain to be postponed.

The recruitment of Mr Causey, a widely-liked family man and devout Catholic, is a coup for the government. Closely involved in the transactions that led Enron to ruin in December 2001, he is expected to prove a highly effective witness, who will be difficult to discredit.

Until now, the most damaging evidence has been provided by Andrew Fastow, the company's former chief financial officer, currently serving a 10-year jail term after accepting a plea bargain of his own. But Fastow's testimony could be undermined by his own admission that he on occasion lied to his superiors and that he stole $60m (£35m) from the company.

Mr Skilling and Mr Lay - Enron's founder and a Texas acquaintance of President George W. Bush, who referred to him as "Kenny Boy" - are the last major Enron figures to face trial in a case which had already seen 15 plea deals before that of Mr Causey.

Enron's collapse came after years of artificially inflating profits and concealing billions of dollars of debt in off-balance sheet "special purpose" entities.

Its collapse, at the time the United States' biggest bankruptcy, wiped out a $70bn corporation, destroyed the life savings of thousands of employees, and brought about the demise of its accountants, Arthur Andersen.