Ex-Enron Official to Testify Against Lay, Skillling

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Former Enron chief accounting officer Richard Causey has struck a plea bargain with federal prosecutors. Causey faced charges of insider trading, fraud and lying about the state of the company's finances. Under the plea deal, Causey is to testify against his former bosses, Kenneth Lay and Jeffrey Skilling.

STEVE INSKEEP, host:

The former chief accounting officer of Enron has reportedly struck a plea bargain with federal prosecutors. Richard Causey faces charges of insider trading, fraud and lying about the true state of the company's finances. He was scheduled to go to trial in January with the former Enron CEO, Jeffrey Skilling, and former Enron chairman, Ken Lay. Now the Associated Press, among others, report that Causey is expected to help the government make its case against the energy trading giant's two top men. NPR's Wade Goodwyn has been covering the story since the company collapsed in 2001.

Wade, good morning.

WADE GOODWYN reporting:

Good morning.

INSKEEP: Why now? Why would Causey face the pressure to make a deal now just weeks before his trial?

GOODWYN: It's hard to know exactly, you know, what is going on. Nobody's talking yet. The ink is barely dry on the plea agreement and the announcement as to what exactly that agreement is going to be is going to come later today. But Causey was staring down the barrel of decades in prison if he was convicted at trial, and that has a way of focusing the mind. For those of us who've been closely following the Enron prosecutions, we had a hard time understanding why Causey wasn't cooperating with the government in exchange for a reduced sentence. Sitting next to Ken Lay and Jeff Skilling at the defense table with all the pretrial publicity in this case, that's a dicey basket to put your eggs in. But waiting until now may have been good strategy. With the trial just around the corner, you can bet prosecutors are contemplating the quality of their evidence or lack thereof, and so they may have been willing to cut Causey a better deal than a year ago.

INSKEEP: Well, once Causey goes over to the other side, what can he do for the Justice Department?

GOODWYN: He can tell the prosecutors where all the bodies are buried and tell the jury the same thing from the stand. As chief accounting officer, Causey was in a position to know who knew about these alleged schemes. Was Jeff Skilling in the room when all this was discussed? How about Kenneth Lay? Who said what? What date was it? Causey might be able to draw prosecutors a road map, and if so, he's worth his weight in gold to the Enron task force.

INSKEEP: But what can he do that the government does not already have, given that the chief financial officer has already turned to the government's side?

GOODWYN: Well, Fastow has, you know, turned state's evidence, but Fastow is damaged goods for the prosecution.

INSKEEP: This is Andrew Fastow, the chief--CFO.

GOODWYN: Andrew Fastow, the CFO. He's the admitted mastermind behind these off-balance sheet partnerships that sunk the company. He's already pled guilty and been sentenced to 10 years in prison. Fastow lined his pockets with more than $40 million while he was bankrupting Enron. You don't have enough fingers and toes to count the number of times Andrew Fastow lied, and he's going to be the government's star witness? Lay and Skilling's defense lawyers were going to carve Fastow up on cross-examination. They were going to pin the blame on Fastow instead of their clients, and there was plenty of evidence to help them do that, too.

Richard Causey is a much more complicated ball of wax. Causey was not the mastermind, he didn't scam tens of millions of dollars for himself, so he's going to be harder to discredit. And with Causey the government now has Enron's two top money guys testifying for them, not just Fastow.

INSKEEP: Any chance that the last two guys left here, Lay and Skilling, could strike some kind of a deal? Do they have anything to give up?

GOODWYN: No. I mean, you know, they're the big cheeses for the prosecution. No one's going to offer them a deal, so there's no one for them to testify against. I think this is probably going to delay the trial that was scheduled for mid-January for as much as two months. Defense lawyers are going to need time to prepare for Causey. It's a significant setback for them and I expect a judge is going to give Lay and Skilling's lawyers a couple of months to deal with this new threat to their clients.

INSKEEP: Wayne, thanks very much.

GOODWYN: It's my pleasure.

INSKEEP: That's NPR's Wayne Goodwyn talking to us about reports that Enron's former chief accountant will plead guilty. This is NPR News.

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