What Does Andy Fastow Know?
By Peter Elkind; Bethany McLean

(FORTUNE Magazine) – The recent wrangling over Lea Fastow's plea bargain with prosecutors offers evidence of how much she had become a pawn in the government's pursuit of Enron's top executives--especially her own husband. For almost two years former Enron CFO Andy Fastow had refused to accept that he needed to cut a deal, serve a stiff term behind bars, and testify against his mentor, former CEO Jeffrey Skilling, for whom he'd named his first-born son. (Fastow's first criminal lawyer, David Boies, urged him to consider striking a deal; Fastow found a new lawyer instead.)

The government's case against Fastow was devastating: He'd not only executed much of the chicanery that deceived investors but also secretly lined his own pocket, collecting $60 million through partnerships that did deals with Enron. He'd even accepted payments disguised as gifts to his wife and children. With his wife's criminal trial looming in early February--offering the prospect of leaving the Fastows' two young boys with both parents behind bars--Fastow finally signalled he was ready to sign on to a proposed deal. Lea would serve five months; Andy would get ten years.

While a judge's objections presented an unexpected hurdle, the investigation has turned a corner. Fastow's cooperation could pave a short, direct route to Skilling and Ken Lay, both of whom maintain their innocence. Only Fastow can answer questions such as, Did Skilling (or even Lay) explicitly direct him to execute deals to hide the company's true financial condition? Did they secretly promise Fastow that Enron would cover any losses incurred by LJM, the "outside" partnership Fastow ran to help cook the books? Did they know about his improper side agreements with Enron's banks? Following his indictment in 2002, Andy Fastow, through his attorneys, said he was doing nothing more than carrying out the instructions of his superiors, who "directed and praised" his work.

--Peter Elkind and Bethany McLean