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23

Enron CEO Ordered Staff to Mislead Investors

The former chief executive of collapsed energy firm Enron told staff to mislead investors

Enron's former executive Kenneth Rice said that the former chief executive of collapsed energy firm Enron, told staff to mislead investors about the company's earnings.

According to Rice, Jeffery Skilling, who is standing trial on fraud changes, urged colleagues to report smaller-than-expected losses.

Rice, who oversaw an Enron internet firm, said Mr Skilling told staff "this is what the number is going to be".

Enron's troubled broadband internet business EBS was at one point on course to report a quarterly loss of more than $146m, despite publicly saying that the loss would be closer to $35m, Mr Rice told a court in Houston on Tuesday.

As the broadband unit's financial position became increasingly precarious, Enron started selling future revenue from its contracts, Mr Rice said.

"I felt we were so addicted to our quarterly earnings that we were selling our future revenue potential," he said.

Mr Rice also countered claims by Mr Skilling that the former chief executive was not closely involved with the deals which eventually lead to Enron's downfall.

"Mr. Skilling was very engaged in the business, he was very hands-on," Mr Rice said. "Almost any transaction of any size we would bring to Mr Skilling to get his approval."

Mr Rice, who ran EBS until July 2001, has already pleaded guilty to charges of securities fraud and is awaiting sentence. He faces up to 10 years in jail.