Kenneth Lay knew that Enron's financial problems were spiralling out of control, even as he said the company was "probably in the best shape it has ever been", his fraud trial heard yesterday.
Andrew Fastow, the former finance director of the collapsed energy trader, directly accused Mr Lay of lying to shareholders, on the second day of his cornerstone evidence.
Mr Lay, Enron's founder, is facing seven charges over the company's spectacular collapse into bankruptcy in 2001. Jeffrey Skilling, the former chief executive, faces 31 charges.
But both deny the charges and fix the blame squarely on Fastow's shoulders. Their lawyers unleashed the most aggressive cross-examination, accusing Mr Fastow of being a masterful liar and "consumed by an insatiable greed".
Fastow said he and Mr Lay had discussed mounting problems during the summer of 2001, including a hole in earnings and accounting mistakes. But they stuck to an "all is well" line in public.
"It was what Mr Lay was saying, what the company was saying. I was trying to keep up the deception as well," Fastow said. "It was a lie."
A fellow director flew back from investor presentations, saying he would otherwise "have to lie too much", Fastow testified. By December 2001, Enron had collapsed into bankruptcy.
The defence team, which is led by Mr Skilling's star attorney Daniel Petrocelli, attacked Fastow's credibility yesterday by setting out the deceptions for which he has agreed to spend up to 10 years in prison under a plea bargain agreed with prosecutors. Messrs Lay and Skilling argue that their former finance chief stole from Enron and kept the extent of its financial problems from them.
Fastow admitted greed and said he lost his "moral compass" at Enron. And he again appeared emotional when he was forced to admit he had deceived his wife Lea. She spent a year in prison for a tax offence arising from his attempt to keep the source of his cash secret.
During his testimony on Tuesday, Fastow had said the labyrinthine financial structures he created to prop up Enron's earnings were fully endorsed by Mr Skilling.
"I am here to tell the truth," Fastow said under cross-examination yesterday. "I've lied on many occasions, but I'm telling the truth here."Reuse content