April 10, 2006
Skilling vows fight on stand
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 vowing he would fight criminal
charges against him "till the day I die."
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 the prosecutors
have lodged against him.
Under questioning from his lawyer, Dan Petrocelli, Skilling
talked about his love for the company 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
Lay, Skilling's co-defendant in the case, returned to the
CEO position he 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 Fastow's deals.
Fastow, who struck a cooperation agreement with prosecutors
and will serve a 10-year prison sentence, testified earlier in
the trial that the 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 to
guarantee he would not lose money on those transactions.
Skilling grew more comfortable as his nearly day-long
testimony proceeded, often addressing the jury directly and
gesturing with his hands as Petrocelli led him through his
background and explanations of Enron operations and business
Skilling said he even proposed putting up $70 million of
his own money -- 80 percent to 90 percent of his net worth --
in a pool with other investors to launch a bid for Enron and
save the company just weeks before it sought bankruptcy. But
that deal never took off, he said.
Skilling said he thought his resignation contributed to the
spiral that sent the company toward bankruptcy after he left.
"I will regret always that I left when I left," he said.
Skilling grew somber as he described watching from the
outside as the company collapsed and called Lay seeking to
return to the company, although he was rebuffed.
When Enron announced it would draw down credit lines of
about $3 billion in October 2001, he knew the problems were
"This was the first indication that there was a liquidity
problem at the company, to me," he said.