Enron's top managers were concerned over a 2001 analyst report as they feared Wall Street had uncovered its accounting tricks, a former executive testified yesterday at the trial of former CEOs Jeffrey Skilling and Ken Lay.
The witness, Kevin Hannon, said the report published in May 2001 by the Off Wall Street Consulting Group valued Enron at only half its value at the time and was discussed at a meeting of Enron's senior managers, including Mr Lay and Mr Skilling.
One top executive told the meeting the report was mostly valid in its criticisms, Hannon said.
The Off Wall Street Report was published on May 6th, 2001, five months before Enron filed bankruptcy. It was one of the first to criticise the company:
It valued Enron's shares at about $27, half its then-market price in the $50s, and suggested the company was inflating its profits through dodgy accounting.
Prosecutors contend Mr Lay (63) and Mr Skilling (52) sought to cover up Enron's deteriorating financial health, hiding losses and portraying the company as healthy and vibrant even as it headed toward the then-largest ever US bankruptcy.
Mr Skilling is charged with 31 counts of conspiracy, fraud and money laundering, and Lay is charged with seven counts of conspiracy and fraud. Both face decades in prison if convicted.
Thousand of employees lost retirement packages worth billions of dollars when the company filed bankruptcy in December 2001.
The trial is scheduled to resume on Monday.