Two of the key figures in the Enron saga yesterday collided face to face over their very different explanations for the company's collapse.

Speaking to a US Senate Commerce committee hearing, the company's former chief executive, Mr Jeffrey Skilling, elaborated on his contention that the company failed only because of a "classic run on the bank", arguing that was made possible because of a "systemic" weakness in many current finance contracts that made it too easy for jittery banks to demand their money back. He warned that such "material adverse change" clauses (MAC) were a serious threat to the proper functioning of the markets and needed to be addressed by Congress.

Mr Skilling repeatedly insisted he had taken on good faith the assurances of the company's auditors, Arthur Andersen, that techniques used to manage risk through hedging in partnerships were perfectly legitimate. "I am not an accountant," he said again and again, but claimed that he believed the partnerships met the legal requirements.

Ms Sherron Watkins, a company vice-president who warned former chairman, Mr Kenneth Lay, last August of potentially serious accounting problems, countered by insisting that Enron's liquidity crisis was the result of internal problems, specifically the failure to prepare for the inevitable crisis of confidence among trading partners arising from the disclosure of dubious accounting practices. She insisted Mr Skilling must have been aware of the dubiousness of those practices. "He would have been very well aware hedges of this kind could not have been achieved with unrelated third parties," she said.

The two witnesses clashed over Ms Watkins's contention that it was never acceptable in accounting to use company stock to improve income statements.

Mr Skilling said that the practice of issuing stock options to executives was precisely such a practice and was acceptable. By reducing compensation payments and substituting stock, a company could boost its profits, he argued.

Meanwhile, the New York Times has reported that investigators have successfully turned a "supergrass", a senior former Enron executive who was heavily involved in setting up and an investor in one of the controversial "Raptor" partnership, LJM2, which concealed Enron debt.

Mr Ben Gilsan, a former company treasurer, is reported to be co-operating fully with the criminal investigation of the Enron collapse and may be offered an immunity deal. His testimony is said to be so valuable that investigators have successfully persuaded congressional committees not to call him for fear of contaminating his potential evidence.

At the hearing, Ms Watkins described his appointment by Mr Skilling to take over from Mr Jeffrey McMahon as company treasurer as evidence that Mr Skilling had no intention to deal with the problems she was raising - "a case of putting the fox into the henhouse", she said. Mr Skilling yesterday denied, however, that he was aware that Mr Gilsan was an equity holder in the LJM2 partnership.

Yet if he scored a few direct hits, a more confident Mr Skilling did little to convince members of Congress that he is the innocent, duped by Arthur Andersen, that he claimed. "I don't believe you when you say you didn't know what was going on," Senator Barbara Boxer said, reflecting that view.