09:05 AM CST on Tuesday, January 10, 2006

Associated Press

The former head of investor relations at Enron Corp. has revised a statement attached to his guilty plea to attribute to former CEO Jeffrey Skilling what could be an incriminating statement he originally said he made.

Mark Koenig, who pleaded guilty in August 2004 to aiding and abetting securities fraud, is among the 61 potential government witnesses for the Jan. 30 fraud and conspiracy trial of Skilling and Enron founder Kenneth Lay.

Koenig is one of 16 ex-Enron executives who have pleaded guilty to various crimes stemming from their actions while employed at the company before it crashed in December 2001. Of those, eight appear on the government’s witness list.In court papers filed last week, Koenig revised a statement attached to his plea agreement that attributed to Skilling a statement he originally said he had made to mislead analysts about why Enron had folded its money-losing retail energy unit into the company’s profitable trading unit.

“First he pleads guilty and says he did it. Now he pleads guilty and says Jeff Skilling did it. The truth is nobody did it,” Daniel Petrocelli, Skilling’s lead trial lawyer, said late Tuesday.  “These guilty pleas coerced by the [Justice Department’s] Enron Task Force are not worth the paper they’re written on.”

Prosecutors declined comment.

Skilling faces 35 counts of fraud, conspiracy, insider trading and lying to auditors for allegedly trying to fool investors into believing Enron was healthy when accounting maneuvers masked the company’s true financial condition. Lay faces seven counts of conspiracy and fraud for allegedly continuing the charade after Skilling abruptly resigned in August 2001. Both have pleaded not guilty.

Among the charges against Skilling is an allegation that he told analysts during a conference call regarding second quarter 2001 results that the retail energy unit, Enron Energy Services, “had an outstanding second quarter” when he knew the unit “was facing hundreds of millions of dollars in concealed losses and was a year or more away from any prospect of success,” according to the indictment.

Koenig’s original statement attached to his guilty plea said that when an analyst participating in the July 12, 2001, conference call asked about the retail energy unit’s restated results, “I responded by stating that the variance resulted from the reorganization of EES and Wholesale business segments, and asserted that those moves were made simply ‘to get some more efficiency out of management of the overall risk management function’ for the units.”

However, in the revised version, Koenig says he responded initially as he originally described, but Skilling told analysts those moves were made simply “to get some more efficiency out of management of the overall risk management function” for the units.