BusinessCompany News‘Enron broadband unit never made a profit’

'Enron broadband unit never made a profit'

Second government witness admits to misleading investors over profits

Kenneth Rice, former CEO of Enron’s broadband business, has testified in
Houston that he knowingly misled investors about the business unit, a key part
of Enron’s growth strategy before the company collapsed spectacurlarly in 2001.

In the trial of former Enron CEOs, Ken Lay and Jeff Skilling, Rice explained
how he made Enron Broadband Services (EBS) appear to be a valuable enterprise
even as it was losing tens of millions of dollars each quarter, CNN.com
reported.

Rice claimed the broadband business never made a profit and said that he
presented information to analysts that led them to believe everything was fine.

Earlier in the day Mark Koenig, former head of Enron’s investor relations
team, finished his marathon session on the stand after Skilling’s attorney, Dan
Petrocelli, wrapped up his cross examination. 

Both Koenig and Rice have already pleaded guilty and agreed to cooperate with
prosecutors in the hope of securing lighter prison sentences. Koenig faces up to
10 years in prison and $1m in fines for his role in the collapse of Enron. Rice
has pleaded guilty to a single count of securities fraud, agreed to pay nearly
$15m, and faces up to 10 years in prison.

Both Lay and Skilling have denied any wrongdoing in the collapse of Enron in
2001, laying the blame on the shoulders of Andrew Fastow, the former CFO.

In January 2004 Fastow pled guilty to two counts of wire and securities fraud
for his role in the accounting scandal. He is currently serving a ten year jail
term.

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