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Witness: Skilling set numbers

Published Feb. 15, 2006

A former top trader who once enjoyed a place in former Enron Corp. chief Jeffrey Skilling's inner circle testified Tuesday that Skilling set earnings targets to please Wall Street and then expected division heads to meet them.

Kenneth Rice, the prosecution's second witness in the trial, ran Enron's highly touted broadband unit before it crashed into bankruptcy proceedings with the parent in December 2001.

He began testifying Tuesday in the fraud and conspiracy trial of Skilling and company founder Kenneth Lay.

He said the broadband unit never lived up to its hype and had millions in losses after he, Skilling and others unveiled it at a January 2000 analyst conference.

But when he told Skilling in late 2000 that 2001 losses would reach $110-million - almost double the $60-million in losses for 2000 - Skilling told him to limit them to $65-million.

Rice said he felt he had no choice but to agree, though the business was flailing.

"Mr. Skilling would simply say, in fact he did say, "This is the number, this is what the number is going to be,' " Rice said.

Rice also said a partnership called LJM, set up by former Enron chief financial officer Andrew Fastow, "looked goofy to me." The partnership existed almost exclusively to conduct transactions to help the Enron meet its earnings targets.

Rice has yet to be questioned by the defense.