HOUSTON — The only former Enron executive to go straight to prison after pleading guilty to a crime testified yesterday that former company chiefs Kenneth Lay and Jeffrey Skilling lied about Enron's strength in 2001 when it was failing.

"It was weak," Ben Glisan Jr., on furlough from prison, said of Enron's financial state by the time Skilling resigned as chief executive in August 2001 and Lay hurriedly resumed the role he had ceded to his No. 2 just six months earlier.

The former corporate titans sought to calm any Wall Street jitters at Skilling's sudden resignation in an Aug. 14, 2001, conference call with analysts — but Glisan directly challenged their truthfulness in his testimony during the eighth week of their federal fraud and conspiracy trial.

"Mr. Skilling said, 'There's nothing to disclose, the company's in great shape.' Was it?" prosecutor Kathryn Ruemmler asked.

"No," Glisan quickly replied.

"Mr. Lay said, 'The company is probably in the strongest and best shape that it's ever been in.' Was it?" she asked.

"No," Glisan said.

Ruemmler also corrected herself during another question in which she referred to Lay as "Mr. Lie."

The ex-treasurer said that by summer 2001, Enron was burdened with crushing debt, company operations generated paltry cash flow and several business units were flailing — and Lay and Skilling knew it.

"We were manufacturing both cash flow and earnings for subsidiaries to achieve those targets," he said, referring to earnings estimates set by Wall Street investment analysts.

Glisan also said Enron's books showed its international asset portfolio was worth more than $10 billion — which was about $5 billion too high, according to Skilling's own estimate in a document shown to jurors earlier in the trial. He said the portfolio should have been written down by more than half to reflect the true market value, but "that was a larger loss than we could have stomached."

Glisan said he joined efforts to downplay any concerns about inflated values the market might have.

"Were investors ever told management believed international assets were overvalued by $5 billion?" Ruemmler asked.

"No. Again, we wanted to alleviate that concern," Glisan replied.

Glisan's cross-examination is not expected to begin until this afternoon. Lead Skilling lawyer Daniel Petrocelli declined comment on his testimony yesterday, but lead Lay lawyer Michael Ramsey claimed the exchange between Glisan and Ruemmler was scripted.

"I am amazed at what can be produced by 100 hours of preparation," the attorney said. "What you're seeing up here is a scripted ventriloquist act."

Glisan, 40, looked like the CPA he used to be when he took the witness stand yesterday. He strolled into the courtroom in the latter part of the day, wearing a business suit and tie like any other witness.

But unlike most of the 16 ex-Enron executives who have pleaded guilty to crimes, Glisan is already federal inmate No. 20293-179. He was granted a furlough for his testimony, allowing him to sleep at home, wear a suit and sip on a venti-sized Starbucks cup while awaiting his turn on the stand.

U.S. District Judge Sim Lake compelled Glisan to testify after granting him immunity from prosecution for other crimes he may have committed at Enron.

Glisan is a key witness against Lay and Skilling, who claim there was no fraud at Enron and that negative publicity coupled with diminished market confidence fueled the company's December 2001 descent into bankruptcy protection.

Glisan has been in prison since September 2003, when he admitted creating four fragile financial structures known as Raptors that he said Enron used to house assets and investments and to hide losses, making the company appear more successful than it was. Prosecutors contend Lay and Skilling knew about the Raptors and how they were used.