Fastow survives grilling by defense

Attacks on his credibility seem to fall short


HOUSTON -- Defense lawyers in the Enron Corp. case completed their cross-examination of star government witness Andrew S. Fastow yesterday, assailing his credibility on multiple fronts but without seeming to score a clean knockout punch.

In four days on the witness stand, Fastow, Enron's former chief financial officer, acknowledged repeatedly that he had secretly stolen millions of dollars from Enron, was driven by greed and had lied to private lawyers and federal investigators investigating the energy-trading company's collapse in late 2001.

He didn't stop lying, Fastow testified yesterday, until he signed a cooperation agreement with federal prosecutors in January 2004, pleading guilty to two conspiracy counts and agreeing to a 10-year prison sentence.

Fastow, 44, also corroborated testimony by previous witnesses incriminating former Enron Chairman Kenneth L. Lay and former Chief Executive Officer Jeffrey K. Skilling in financial manipulations meant to boost reported profits and hide festering problems within the one-time Wall Street darling.

Jacob H. Zamansky, a New York securities lawyer who has visited Houston several times to watch the trial, said Fastow held up reasonably well on the stand.

"He was an important witness for the defense because they said in opening statements that they would destroy him, and I don't think they accomplished that," Zamansky said. "He was consistent with prior witnesses, and he opened a window for the jury by explaining things in simple terms."

Lay, 63, and Skilling, 52, face decades in prison and millions of dollars in fines if convicted of conspiracy and fraud charges.

Michael W. Ramsey, Lay's chief defense lawyer, challenged Fastow's testimony about a meeting between Fastow and Lay on Aug. 15, 2001, a day after Lay had resumed the chief executive's post after Skilling's surprise resignation.

Fastow said one of the things they discussed was Enron's need for a "massive restructuring" to address severe weaknesses in two of its U.S. businesses and the decline to near worthlessness of some of the company's overseas assets, including a power plant in India and a power company in Brazil.

Fastow testified that he approached Goldman Sachs & Co. later that August to discuss work that the investment banking company might do for Enron, including helping to organize the restructuring.

Ramsey showed Fastow several Goldman Sachs documents relating to three meetings its representatives held during that period with Fastow and other Enron officials. The documents indicated that most of the discussions concerned ways to protect Enron against a hostile takeover rather than the purported need for a major restructuring.

Ramsey was trying to bolster the main theme of the defense, which is that Enron was healthy until weeks before its December 2001 bankruptcy filing. Its demise, he contended, resulted from a loss of confidence by Enron's trading partners, spurred in part by revelations of Fastow's questionable deals.

When the trading partners refused to extend Enron credit, trading - Enron's lifeblood - halted and the company could no longer pay its bills, Ramsey contended.

Thomas S. Mulligan writes for the Los Angeles Times.

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