Kenneth Rice, former CEO of Enron Corp.’s broadband unit, testified Thursday that ex-boss Jeffrey Skilling wanted him to offer an optimistic forecast of his unit for the company’s board of directors in mid-2001 to mirror misleading statements Rice made to financial analysts earlier in the year. However, Rice, testifying at the trial of former Enron CEO Skilling and founder Kenneth Lay, never said Skilling lied to investors about the company’s health.

Rice, who completed his testimony in Houston Thursday, said he had no documents and only his recollection as proof of a conversation with Skilling in May 2001 concerning a board of directors meeting to discuss EBS.

Skilling faces 31 counts of fraud, conspiracy, insider trading and lying to auditors and investors, while Lay faces seven counts of fraud and conspiracy related to the months after he replaced Skilling as CEO in August 2001 and until the company dissolved into bankruptcy four months later.

In January 2001, Rice testified he told financial analysts that his unit, Enron Broadband Services (EBS), was well positioned for long-term financial performance. However, he said he did not reveal that EBS, which was officially rolled out in 2000, was spending about $100 million every quarter, with little revenue or business. As he prepared for a May 2001 meeting of the board of directors, Skilling “wanted me to put a presentation together that was more consistent with the analyst conference and less direct on some of the challenges we were facing at EBS,” Rice said.

“What I presented to [the] board was inconsistent with what was going on at EBS,” Rice said. He also told Skilling attorney Mark Holscher, “I knew that Mr. Skilling and I had misled investors on a number of occasions on the prospects of our business within EBS.”

Asked if he had ever expressed his concerns to Skilling about the misleading statements, Rice said, “I don’t know if I did.”

Rice also testified Thursday that a 2000 sale of unused dark fiber owned by EBS to LJM, the related-party transaction run by former CFO Andrew Fastow, was considered a legitimate “arm’s-length” transaction that created actual profits for EBS.

EBS paid about $1,100/fiber mile, but when it found no buyers for the material, it sold LJM the fiber for about $1,400/mile. LJM then resold it over the open market for $1,800/mile, and EBS received a share of the profits under the earlier purchase provisions, Rice said. He testified the sales were a standard part of the unit’s strategy.

Rice also testified about an e-mail he sent to Skilling in June 2000 concerning his future at EBS. At the time, Rice was co-CEO of EBS with Joe Hirko. Rice wrote Skilling that if EBS could be modeled like Enron’s wholesale gas trading operation, “this business has the potential to be truly awesome. We’ll be like kids in a candy store in a year or so.”

The e-mail to Skilling indicated Rice did not think Hirko was up to the job as co-CEO, and he added, “I like my chances of getting rich faster if I am running the business.” Less than a month later, Hirko was out and Rice was the EBS CEO. Hirko provided some consulting work for EBS, but he left Enron a few months later.

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