As a self-described "Enron guy" and a member of the company's inner circle, Kenneth Rice's testimony brought jurors into corporate headquarters - and private conversations he said he had with former chief executive Jeffrey Skilling.

Through two days of cross-examination in the fraud trial of Mr Skilling and former Enron chairman Kenneth Lay, the prosecution witness held firm in his central allegations - pointing to e-mails and calendar entries to support his claims of meetings in which he warned the former chief executive that Enron's internet broadband unit had failed to attract customers and cash.

Rice also explained why executives might tout the high-speed internet unit in the face of mounting problems: a corporate obsession with building the size of the company; increasing the stock price; and making up for what he said Mr Skilling called "nada" - no growth in the debt-laden international division.

"Mr Skilling and I had misled investors on a number of occasions about the prospects for our business," Rice testified.

Once a close friend and protege of Mr Skilling's, Rice (47) has pleaded guilty to securities fraud and turned over almost $14 million (€11.76 million) in assets to the government, including sports cars and diamond jewellery.

In contrast to the prosecutors' first witness, former investor relations chief Mark Koenig, who sometimes bristled with anger and glared at defence lawyers under hostile fire, Rice reacted by taking off his glasses, crossing his arms and grinning.

Rice had little to say about the activities of Mr Lay, who like Mr Skilling faces fraud and conspiracy charges that could lead him to spend the rest of his life in prison. Both men maintain their innocence and argue that law enforcement officials pressured their former colleagues to admit guilt rather than face decades-long prison terms.

Mr Skilling's defence team tried to paint Rice as an executive who was "checked out" from day-to-day operations and could not say how many people he employed by the middle of 2001.

Several members of the eight-woman, four-man jury laughed on Wednesday when Rice raised doubts about his own credibility. In response to aggressive questions from defence lawyers about discrepancies between what he told the jury and what he told friends in 2001, Rice said he "usually" told the truth.

In a point that defence lawyers are likely to highlight for the jury at the close of the case, Rice did not say that Mr Skilling directly ordered him to lie to analysts or investors. Nor did he provide any examples of one-on-one conversations in which Mr Skilling explicitly discussed earnings manipulation using explicit terms such as "fraud". But Rice told jurors that Mr Skilling directed him to put an overly positive spin on a presentation to Enron board members in May 2001, though he could not point to documents to back up his account of that conversation.

Under cross-examination from defence lawyer Mark Holscher, Rice also admitted he never confronted Mr Skilling about misleading statements to analysts and employees about the internet business in late 2000 and 2001.

Rice resisted defence efforts to paint the broadband unit as a potential saviour for Enron. Instead, he reiterated time and again that two of the three businesses in the unit failed to attract customers as costs spiralled to as much as $400 million per year.

He said he had turned to consultants at McKinsey & Co, who advised him to acquire a bigger company to gain clients and technical expertise as a "survival strategy". Mr Skilling, he said, knew all about the division's problems when he told analysts in January and March 2001 that the business was growing fast.

Rice testified that what little earnings the unit mustered came from deals with former Enron finance chief Andrew Fastow, sales of future revenue from its video-on-demand business, and technology investments in other companies. "In early 2001, for sure, I was very concerned about the survival of our business," he said.

Efforts by the defence to use Rice as an excuse to play webcasts of investor and employee presentations failed.