28 Feb

Enron Raided Reserves to Boost Earnings

Wesley Colwell, the former head of accounting of Enron’s wholesale energy unit testified that in July 2000, he shifted $14 million from reserve accounts to pump up earnings. He also testified that neither Kenneth Lay nor Jeffrey Skilling directly told him to manipulate earnings.

Colwell testified that Enron’s wholesale unit delayed financial reports for the fourth quarter of 2000 until they were instructed on how much profit the company wanted to report.

He also testified that in 2001, the company improperly delayed reporting losses in the retail energy operation.

Colwell is cooperating with the government, and has already paid a $500,00 fine to settle SEC allegations that he manipulated earnings.

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