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Skilling proclaims innocence on stand

April 10, 2006

By Matt Daily

HOUSTON (Reuters) – Former Enron Chief Executive Jeffrey
Skilling took the witness stand in his own defense on Monday,
proclaiming his innocence and telling the jury he never
imagined the company he helped create would collapse.

Skilling, 52, and former Enron CEO and Chairman Ken Lay
stand accused of lying to investors and analysts to hide the
dismal financial health of Enron, which collapsed in December
2001 in the then largest-ever U.S. bankruptcy.

“It’s not in my nature not to fight something like this.
The charges against me are wrong,” a visibly nervous Skilling
testified. “I will fight those charges till the day I die.”

Legal experts have said Skilling’s testimony at the trial
will be a crucial factor in whether he is convicted of the 28
counts of conspiracy, fraud and insider trading lodged against
him.

Under questioning from his lawyer Dan Petrocelli, Skilling
talked about his love for the company that he helped build from
a sleepy Houston pipeline company into an international trading
giant, and his decision to resign as chief executive less than
six months after taking up the post.

“I was exhausted … my head just wasn’t in it anymore,” he
said.

Lay, Skilling’s co-defendant in the case, returned to the
CEO position he had previously held for 15 years after
Skilling’s departure. He is expected to testify later in the
trial, in which he faces six charges of conspiracy and fraud.

Both men have pleaded not guilty, and face decades in
prison if convicted at the trial that began at the end of
January.

Enron’s demise was the first in a wave of corporate
scandals that shook the financial world and eventually prompted
stricter disclosure rules for companies.

Petrocelli asked Skilling whether at the time of his August
2001 departure, less than four months before the company would
tumble into bankruptcy, he believed Enron would collapse.

“Not in my wildest dreams. It’s almost inconceivable now
that it happened,” he said.

A $1 billion charge Enron announced in October 2001 did not
trouble him, Skilling said, since he believed the company was
using his departure “to clean things up.”

But a negative story in the Wall Street Journal the
following day and several subsequent articles highlighting the
dubious deals Enron had undertaken with partnerships operated
by former Chief Financial Officer Andrew Fastow put pressure on
Enron’s already weak stock.

“I believed strongly the transactions were appropriate and
proper,” Skilling said.

Skilling and Lay have both blamed Enron’s demise on a “run
on the bank” caused by the revelations of the Fastow’s deals.

Fastow, who struck a cooperation agreement with prosecutors
and will serve a 10-year prison sentence, testified earlier in
trial deals with his LJM partnerships were designed to hide
billions of dollars in losses at Enron while inflating its
earnings.

Fastow also said he had a secret deal with Enron’s former
chief accounting officer that was backed by Skilling that
guaranteed he would not lose money on those deals.


Source: reuters



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