The Government’s noose around neck of Jeffrey Skilling and Kenneth Lay got a bit tighter today as Kevin P. Hannon, former chief operating officer of Enron Corp.’s heavily promoted telecommunications unit, became the latest former Enron executive to plead guilty to criminal charges.
Mr. Hannon, 44, pled in U.S. District Court in Houston to one count of conspiracy to commit securities and wire fraud, and agreed in the plea bargain to cooperate with the Enron Task Force’s continuing criminal investigation and prosecution of other former Enron executives. One of those undoubtedly will be Mr. Skilling, who was heavily involved in the promotion of Enron’s telecommunications unit. The deal also provides that Mr. Hannon faces up to five years in prison, the payment of $3.2 million in forfeitures and penalties, and the settlement of a related SEC civil suit.
In the late 1990s, Enron’s top executives touted Enron Broadband as one of the company’s best growth opportunities. Enthusiasm among investors for the broadband operation helped increase Enron’s stock price despite the fact that the unit never came close to meeting either company or market expectations.
As part of his plea agreement, Mr. Hannon admitted that he overstated Enron Broadband’s accomplishments. In particular, during a January 2001 conference with securities analysts, Mr. Hannon admitted in the plea bargain that he took part in a presentation that “was intentionally misleading and falsely portrayed the company as a commercial and business success. I conspired with other Enron employees to achieve this improper purpose.”
Meanwhile, the beginning of the trial of the Nigerian Barge case is now less than three weeks away.