Software touted publicly as capable of making Enron Corp.'s broadband network work better and faster than any other was called "the secret sauce or pixie dust" by workers who knew otherwise, a former Enron broadband employee testified Wednesday. "It was referred to as the secret sauce or pixie dust," former director of product engineering Shawna Meyer told jurors in the trial of five former Enron broadband executives. "Sprinkle it around or add some secret sauce to the network and it would solve all the problems that we had." "Did it?" asked prosecutor Cliff Stricklin.
"No," she said.
The dramatic contrast between such testimony from underlings and their superiors' public statements is expected to be a recurring theme throughout the two-month trial centering on Enron's much-ballyhooed Internet venture that later fizzled.
Of the five executives, three -- former unit CEO Joseph Hirko and former vice presidents Rex Shelby and F. Scott Yeager -- are charged with conspiracy, fraud, insider trading and money laundering. The government contends they made false claims of advanced capabilities about Enron's broadband network so they could get rich by selling company stock inflated by the hype.
The other two, Kevin Howard and Michael Krautz, are charged with conspiracy and fraud for allegedly faking earnings in a failed video-on-demand deal to minimize the broadband unit's publicly reported losses.
Meyer, who testified all day Wednesday, said she joined Enron in March 1999 because the company aimed to build and operate the best broadband network in the country. She was well-versed in managing broadband infrastructure and became a technical engineer for the unit.
Enron put out a news release a month after she was hired that said its so-called "intelligent" network was "lit, tested and ready to deliver new-world Internet applications." It also said software called InterAgent, obtained when Enron bought Shelby's software company the prior year, was embedded on every network server and had capabilities competitors couldn't match.
Meyer, the first prosecution witness, said the network was still in development, InterAgent wasn't embedded,and engineers made fun of the software that wasn't a be-all, end-all problem solver as described by higher-ups.
In December 1999, Meyer observed a demonstration to a division of NBC of a how users could reserve bandwidth that was attended by Enron CEO Jeffrey Skilling as well as Shelby and other senior broadband executives. The next month Skilling would promote the broadband division to analysts as a core Enron business on the same plane as energy trading and pipelines.
The demonstration showed how InterAgent could fix a distorted picture, but the software wasn't embedded in the entire Enron network as Shelby said it was, she said.
Meyer said she didn't correct Shelby because "it would have been a career-ending move for me."
She quit four months later because "it felt somehow illegal" to be involved in a venture being touted as something it wasn't.
She said as much to Hirko in her exit interview, and she said he replied, "I can see how you would feel that way."
But under cross-examination by Per Ramfjord, one of Hirko's lawyers, Meyer acknowledged she used the word "unethical," not "illegal," in her statement that solicited that response from Hirko.
Hirko's lawyers say he fought Enron's push for instant success in broadband because he supported a more methodical approach and was pushed out in mid-2000.
Defense attorneys questioned Meyer's glowing description of her job and the network's capabilities on a videotape she made for the company at her boss's request. She said she was talking about a specific feature she was responsible for that could stream television shows over the network, not InterAgent or the network's operating system.
"I was asked to talk about MediaCast," she told Yeager's lawyer, Tony Canales. "I wanted to stay employed by the company. I don't think it would be wise to speak badly of the company, expecially when you're asked to do a videotape."
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