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Government Panel Investigating Collapse of Enron Gives Company's Former CEO One Week to Clarify Testimony

Aired March 01, 2002 - 05:17   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: A government panel investigating the collapse of Enron has given the company's former CEO one week to clarify some of his earlier testimony. Jeffrey Skilling insists he didn't know about Enron's financial problems before he left the company. Lawmakers are, well, shall we say, skeptical. They say they have new documents that appear to raise serious questions about the accuracy of Skilling's testimony.

Our Larry King had an exclusive interview with Skilling. Let's listen.

(BEGIN VIDEO CLIP)

LARRY KING, HOST: When this whole thing broke, you were as shocked as everyone else?

JEFFREY SKILLING, FORMER ENRON CEO: Larry, I spent probably most of my professional life helping to build Enron Corporation. I don't think there was anyone that was as shocked by the collapse of the company as I was.

KING: And now in retrospect can you say oh, I should have known it then, or I should have seen this coming, or should have, would have, could have? In retrospect, what could I do different?

SKILLING: Well, you know, and I've said before, you know, I've gone back and as I'm sure you would do, as anyone would do, I've gone back through the last five years with the company and I've thought about all of the decisions we made, some related to some of these issues that have come up subsequently. And I believe that given the information that we had at the time and the data that we had at the time, I think we made the right decisions.

KING: Did you have wrong data?

SKILLING: I think, looking back on things, I think we, given what we had at the time we made the right decisions. Are there things that now, in retrospect, with what I've seen happen to my company, would I have done some things differently? I think, I think we all would do so.

(END VIDEO CLIP) COSTELLO: You want to hear more? Well, you can. You could watch the whole interview tonight at 9:00 Eastern, 6:00 Pacific Time on CNN's "Larry King Live," of course, right here on CNN.

And we've been looking all week at the fallout from Enron in our series Who Can You Trust? This morning we look at how mutual funds fared when the energy giant collapsed.

CNN Financial News Correspondent Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice over): Mutual funds are supposed to give investors diversity and investment expertise. In the case of Enron, fund investors were cushioned from the stock`s fall because funds generally hold small amounts of anyone's stock.

But in many cases, the professional portfolio management that fund investors pay for either failed to spot or ignored warning signs that Enron was a risky bet.

RUSS KINNEL, MORNINGSTAR: Some fund managers are judged quarter to quarter and those managers feel tremendous pressure to get a hold of the stocks that are doing the best. In the case of Enron, it was one of the few stocks that was actually growing in the year 2000-2001. And so it was a really compelling story for a growth manager who's seen all of their favorite tech stocks crash and burn.

WIAN: Janus Capital was one of Enron's largest shareholders, with more than five percent of the stock. While Janus says it was a net seller of Enron for most of last year, it held onto some shares as late as mid-November, three weeks before Enron's bankruptcy filing. In a statement, Janus says: ``Although we didn't escape the entire decline of Enron's stock value, as a complex we came out about neutral on our position.'' That's because Janus Funds profited from Enron's earlier run up.

Some portfolio managers say they avoided Enron because the market overvalued its reported profits from trading operations. Others say they simply didn't understand Enron's business.

BOB SMITH, T. ROWE PRICE: Yes, well we have trouble understanding how a company makes the money that they report, and not that we thought it was fraudulent or we thought there were issues, it's just that we couldn't see how it was growing and why it would continue to grow at the rate it did. You know, we chose not to own it.

WIAN: The fact is many funds were fooled by Enron. In late October of last year, about 15 percent of Enron's stock was still owned by mutual funds.

DON CASSIDY, LIPPER, INC.: The investment business is an art. It's not a science. A lot of people got fooled, not only professional managers, but individuals. WIAN: Cassidy says he expects the Enron experience may convince fund managers to avoid complex companies, and may actually draw more investors to mutual funds because in the end investors who owned funds with Enron fared better than those who were left holding the stock.

Casey Wian, CNN Financial News, Los Angeles.

(END VIDEOTAPE)

COSTELLO: And tonight "Moneyline" looks at the transparency of the companies and their financial statements. The final part of our series Who Can You Trust airs tonight on "Lou Dobbs Moneyline" at 6:00 Eastern time.

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