WASHINGTON -- Former Enron chief executive Jeffrey Skilling was so upset as the company's stock price plummeted last summer that he told the former chairman, Kenneth Lay, he couldn't sleep at night and would resign, Lay told company investigators.
In 17 pages of notes released Tuesday, Lay appeared to contradict Skilling's recent testimony before Congress. Lay told the investigators he was shocked when Skilling told him he was leaving the energy trading company after about six months as chief executive officer, the interview notes said.
"Skilling was taking Enron's stock decline personally and could not sleep at night," Lay is quoted as telling investigators last month.
Skilling testified Feb. 7 at a hearing of the House Energy and Commerce Committee's investigative panel that when he resigned in August, "I did not believe the company was in any financial peril. ... I absolutely, unequivocally thought the company was in good shape."
The notes, among a batch of documents released by the Energy and Commerce Committee, are the first detailed accounts of Lay's defense regarding the collapse of the energy-trading company. He has invoked his Fifth Amendment right against self-incrimination and refused to testify to Congress.
Another document shows that Enron's former chief financial officer, Andrew Fastow, defended his role in running a complex web of partnerships to the company's outside attorneys last summer and said all changes in the transactions were approved by the board and Enron's auditors.
Fastow was interviewed on Aug. 27 by attorneys at Vinson & Elkins, who were looking into allegations by Enron executive Sherron Watkins of serious accounting problems involving the partnerships -- which were used to hide more than $1 billion in debt and eventually brought down the company. Watkins, an accountant and vice president, had sent a detailed written warning to Lay that month, initially anonymously.
Fastow "expressed some irritation" with the unknown employee's complaint, according to the interview notes, and questioned the employee's motives, stating his belief that the employee was acting with someone who was after Fastow's job. Fastow, who also has asserted his Fifth Amendment privilege and refused to testify, made at least $30 million from the partnerships.
William Powers, a former Enron director and University of Texas Law School dean who headed the internal investigation, has told Congress that Lay "bears significant responsibility ... for Enron's failure to implement sufficiently rigorous procedural controls to prevent the abuses."
Lay also told company investigators that Skilling, his successor as chief executive officer, knew details of many of the partnership transactions that sent Houston-based Enron toward the biggest bankruptcy in U.S. history.
Lay was quoted as saying that Skilling presented board members with the idea for one of the crucial partnerships. In another instance, Lay said, Skilling would have been responsible for tracking the financial performance of one of the deals.
"Lay did not know who came up with the idea of LJM (a partnership), because Skilling and Fastow presented the idea together," stated the investigators' notes from a Jan. 16 interview.
Skilling testified before Congress that he knew few details of the partnership transactions.
A spokeswoman for Skilling, Judy Leon, didn't immediately return a telephone call seeking comment Tuesday night.
Lay told the Enron investigators he never felt Skilling was trying to manipulate him, and Skilling always kept him well-informed on the company's business.
Telling investigators he had a hands-off management style, Lay repeatedly said he was unable to recall key details of the partnership transactions.
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