“We needed that cash and needed it badly. There wasn’t a plan to hold onto these assets for a better deal,” Glisan testified, in response to a defense suggestion that Enron held poor-performing assets in hopes of securing a better price.
* * *
Glisan was asked whether short-sellers, who make money when a stock falls, could disrupt Enron’s access to capital markets. “It’s true that short-sellers want to interject negative information. The question is can the company respond to it?”
* * *
On cross-examination, Lay lawyer Bruce Collins sought to poke holes in Glisan’s assertion that he adequately warned Lay in October 2001 of Enron’s shaky finances. Collins cited a corporate secretary’s notes from an October 2001 board meeting that showed Glisan told directors — including Lay — that Enron had immediate access to $1.5 billion in cash and more was “under consideration by the company.”
* * *
Glisan acknowledged that he walked out of a meeting on Oct. 22, 2001 before Enron’s accounting chief told Lay and the other directors that auditors had determined that no write-down would be necessary for the company’s water unit. Collins presented Glisan’s admission to the jury as evidence that Glisan, Lay and Skilling were working off of different information.
* * *
Glisan testified about the financial structures that he helped design that had no other business purpose than to help Enron manage its accounting of losses and poor assets. “We took pride — I took pride — in helping the company do that,” Glisan told the jury.
* * *
Glisan testified that, at an October 23, 2001 meeting, he told Fastow that “bankers had lost confidence in him and the expectation was he would leave the company.”
* * *
Collins took issue with Glisan’s characterization of Lay “giggling … in delight” at the notion that outside auditors had approved of the Raptors. “I’ve gotten to know Mr. Lay pretty well. He may chuckle, but he doesn’t giggle,” Collins said. “I concede chuckle as opposed to giggle,” Glisan replied.
* * *
One of the defense’s key arguments is that Enron’s collapsed was triggered by a loss of investor confidence not fraud. “If Enron hadn’t gone bankrupt, we wouldn’t be here, would we?” Petrocelli asked, to which Glisan replied: “That’s hard to know.”
* * *
Glisan testified that, in October 2001, he told Lay that “Bankruptcy is inevitable,” and that Lay didn’t have much of a reaction, though seemed “somewhat resigned.” The next day, according to a transcript of a meeting shown to jurors, Lay told employees, “The company is doing well financially and operationally,” and “liquidity is fine.”
* * *
Petrocelli’s cross of Glisan got heated at times, with Petrocelli at one point asking Glisan if he’d “lied all day” on the stand Wednesday when he gave detailed accounts of wrongdoing by Enron management. “Absolutely not,” Glisan replied.
* * *
Petrocelli accused Glisan of signing a statement that was written for him by prosecutors. “They picked the crime, they wrote it up, you signed your name!” Petrocelli said. “I wrote it,” Glisan replied. “I edited it to make sure the statement I gave was accurate.”
* * *
Glisan testified that Skilling backed the Raptors as a way to skirt accounting rules, though admitted that he had no notes, emails or documentation to that effect. “The conversations were quite memorable,” Glisan said, defending his recollection. And even though he took extensive notes during his last two years at Enron, he testified that, “some of the meetings I had with Mr. Lay did not allow me the opportunity to take notes.”
* * *
Glisan described to jurors his first pitch of the Raptors to Enron’s finance committee in May 2000. Enron’s former top accountant, Richard Causey, told the committee that the structure was risky but nonetheless approved by outside auditors. Lay’s response was to “giggle in delight,” according to Glisan’s testimony.
* * *
In 2001, Lay asked Glisan to find out how large a write-down would have to be to affect the energy giant’s credit rating, according to Glisan’s testimony. “That’s backwards,” Glisan told jurors. “What should occur is we should take the charges that we needed to take and then deal with the consequences.” What actually occurred, Glisan said, was that Enron reported a charge of about $1 billion, which wouldn’t prompt a downgrade, instead of the several billion in actual charges that executives had discussed internally.
* * *
At one meeting, several Enron executives suggested doing away with “structured finance” transactions to help the company manufacture earnings. According to Glisan, Lay replied: “we rely on these; they are imperative to hit our numbers and we’re going to keep doing them.”
* * *
Lay went to the board’s finance committee to ask for an increase in the risk Enron’s trading unit could take on, Glisan testified. When the committee chairman balked, Glisan said Lay countered with: “were the finance committee not able to increase risk limit, we might not reach our earnings targets … and might have to issue a warning” on earnings.
* * *
On the day Skilling resigned, Enron’s financial condition was “weak,” Glisan testified. That same day, Lay and Skilling offered an upbeat assessment of the company and outlook. When asked if Lay and Skilling were aware of Enron’s problems, Glisan replied, “Yes, they were.”
* * *
Glisan testified that there were “billions of dollars of embedded losses” in Enron’s international assets. The company didn’t take write-downs because it would have required “a larger loss than we could have stomached,” Glisan said.
* * *
Outside the jury’s presence, Glisan invoked the Fifth Amendment when asked if he committed any other crimes while at Enron.
