Fastow has no record of deals

HOUSTON (AP) – Jeffrey Skilling’s lawyer painstakingly challenged whether the former chief executive gave secret guarantees that partnerships run by Chief Financial Officer Andrew Fastow wouldn’t lose money if the two men pretended to buy weak Enron assets to help the company manipulate earnings.

Fastow, whose testimony has been highly anticipated, underwent a second day of intense cross-examination Thursday in the conspiracy and fraud trial of Skilling and Enron founder Kenneth Lay.

Fastow has linked both his former bosses to a wide-ranging effort to hide Enron’s wobbly finances from investors, in part by using his partnerships to buy assets and rid the energy company’s books of hundreds of millions of dollars in debt.

Lay has repeatedly pegged Fastow as a crook who betrayed his trust and helped undermine the company, which collapsed into bankruptcy proceedings in December 2001. His lawyers have yet to cross-examine the ex-CFO.

But Petrocelli worked tirelessly to depict Fastow as a liar, cheat, thief and a bad husband who failed to plead guilty to any of the dozens of counts against him before his wife was indicted in May 2003. Fastow pleaded guilty to two counts of conspiracy in January 2004.

Samuel Buell, a former prosecutor with the Justice Department’s Enron Task Force who now teaches at the University of Texas School of Law, said Fastow appears to be a tough opponent, given his baggage.

“No one’s going to think he’s become a new man. Someone like this coming to genuine terms with the man he really is counts as pretty significant,” said Buell, who secured the indictment against Skilling just before he resigned from the task force.

“How often do jurors see this kind of self-abasement from people they encounter in their everyday lives? It has to make an impression on them, and they certainly won’t be seeing it when the defendants testify,” Buell said.

Zeroing in on a copy of Fastow’s handwritten record of profits that were promised to his partnerships – dubbed the “Global Galactic” – Skilling lawyer Daniel Petrocelli sought to show the document was no smoking gun.

Fastow has claimed that Skilling, who was chief operating officer in 1999 when the partnerships were created, made verbal promises to him – Fastow called them “bear hugs” – that the partnerships would lose no money on two deals noted on the document.

“We had side agreements, Mr. Petrocelli. That’s how we did business,” Fastow said.

In the deals, a partnership dubbed LJM1 bought an interest in a troubled Brazilian power plant in the third quarter of 2000, and another, called LJM2, bought three power plants mounted on barges off the coast of Nigeria in June of that year.