Enron's Skilling takes stand

Ex-CEO defends actions, denies guilt

April 11, 2006|By GREG BURNS | GREG BURNS,CHICAGO TRIBUNE

HOUSTON -- The most prominent white-collar criminal trial of the era reached a pivotal point yesterday as former Enron chief executive Jeffrey K. Skilling testified in his own defense and in the defense of his corporate creation.

Enron was one of America's top companies, filled with businessmen like himself who were done in by the media, hostile investors and a bad apple serving as chief financial officer, Skilling told jurors.

Subdued as he described its flameout and animated as he lectured the jury on its business strategy, Skilling spent four hours explaining why he disagrees with the prevailing view of Enron as a crooked house of cards. "Enron was the finest corporation in the world," the 52-year-old Skilling said. "We were making the world better."

His much-anticipated testimony comes nearly five years after Enron collapsed in an accounting scandal that brought down a powerhouse accounting firm and shook the world's confidence in U.S. financial markets.

He faces 28 criminal counts of conspiracy, fraud, lying to auditors and insider trading.

Co-defendant Kenneth L. Lay, Enron's founder and former chairman, faces six counts of fraud and conspiracy.

Skilling's testimony is expected to continue into next week.

Skilling appeared calm and reasonable yesterday. From the witness stand, he pointed out his family members in attendance and showed little of the aggression that marked his tenure at Enron. "In some ways, my life is on the line, so I'm nervous," he said as his testimony began.

When asked by his lawyer, Daniel M. Petrocelli, "Are you innocent or guilty?" Skilling didn't hesitate. "I am absolutely innocent," he said.

Later, he added, "The charges against me are wrong. I will fight those charges til the day I die."

He repeated what he said twice before congressional panels in 2002, that Enron was "in very good condition in the middle of August [2001] when I left."

Petrocelli asked if he had any clue that Enron would flame out in scandal less than four months later. "Not in my wildest dreams, no. It's almost inconceivable now what happened," the former chief executive said.

"Would you have left if you thought the company was going to experience the events that later transpired?" Petrocelli asked. "No," Skilling replied matter-of-factly.

Since the trial opened with jury selection Jan. 30, prosecutors have brought 22 witnesses supporting the charges. Skilling is accused of concealing Enron's faltering finances through deceptive accounting and deliberate lies, propping up the stock price so he could cash in Enron shares.

Some of Skilling's most compelling testimony came as he described Enron's rapid failure in the fall of 2001. Asked about TV images of freshly dismissed employees filing out of the headquarters building here with their belongings, Skilling said, "You wanted to die."

He said his decision to step down as chief executive in August 2001 inadvertently contributed to Enron's downward spiral.

His departure, Skilling said, had nothing to do with doubts about the company's future, but rather feelings of burnout, combined with his desire to reconnect with loved ones. "I'll always regret that I left when I left."

He offered to come back to Enron as its stock plunged in October 2001, amid doubts about its financial reporting, but Lay and others running the company turned him down. "They were hoping this would blow over," he said. "I was devastated."

At one point yesterday, Petrocelli peppered Skilling with rapid-fire queries aimed at demonstrating that his client took no steps in the aftermath of Enron's fall that would suggest a guilty conscience: Did he destroy documents? Move money offshore? Leave town? Dump stock? Get his story straight with other alleged conspirators? "No," Skilling answered, again and again.

He even had kind words for Andrew S. Fastow, the former Enron finance chief who has pleaded guilty and testified against Skilling earlier in the trial. "He was a good guy," Skilling said. "He was very good at what he did. He had a good sense of humor."

At one time, Skilling was among the most admired executives in the country.

After joining Enron in 1990, he set out to remake it from a staid utility into an innovator filled with ambitious deal makers in his own image. He pushed to deregulate old markets and exploit new ones, de-emphasizing hard assets such as pipelines and power plants in favor of trading commodities that ranged from natural gas to broadband.

Yesterday, he stood beside charts explaining some of his strategies, speaking directly to the jury, as he did during much of his testimony. He implied at several junctures that he was oversimplifying for their benefit, telling them at one point, "It's a lot more complicated in real life," and explaining how he was often told certain jargon he favored was "too hard to understand."

Skilling embraced unconventional ideas, and fostered a rough-and-tumble corporate culture where results mattered above all else. Wall Street cheered when he took over the CEO post from Lay at the end of 2000.

Unlike Lay, Skilling was closely involved in operating the off-the-books partnerships run by Fastow. Skilling previously has denied much of what Fastow told the jury, including the existence of a handshake agreement between the two men ensuring the side deals would make money for Fastow.

Petrocelli said Skilling still has "a lot of ground to cover," and promised to march through the indictment step by step before yielding his client to what could be a lengthy cross-examination by the prosecution.

"We're right on schedule," Petrocelli said after court ended for the day. "We accomplished what we set out to do."

Skilling declined to comment as he left the courthouse.

Greg Burns writes for the Chicago Tribune. The Associated Press contributed to this article.

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