Enron’s Skilling ends testimony, denies guilt

By Matt Daily and Erwin Seba

HOUSTON (Reuters) – Former Enron chief executive Jeffrey
Skilling wrapped up nearly eight days of testimony at his fraud
and conspiracy trial on Thursday, firmly denying he committed
any crimes at the failed energy company.

“I’ve waited a long time to get to say something (about
Enron),” Skilling told reporters as he left the federal
courthouse for a lunch break.

“I feel that I’ve had fair opportunity to explain the
questions about the company.”

Skilling, 52, and former Enron CEO and Chief Executive
Kenneth Lay, 64, are charged with lying to investors about the
dismal financial state of the company that was once the
seventh-largest in the United States.

Its dramatic collapse into bankruptcy in December 2001 —
the largest ever at the time — was the first in a wave of
corporate scandals that went on to include Worldcom, Global
Crossing, HealthSouth Corp. and Adelphia Communications Corp.

Lay is expected to take the stand early next week.

MIXED REVIEW

Legal experts who watched Skilling’s testimony said he had
been an effective advocate for himself while under four days of
questioning by his attorney, Daniel Petrocelli.

But under the grueling, often acrimonious questioning by
Berkowitz, Skilling was often evasive and failed to remember
key discussions with other Enron executives.

“Skilling did a good job on direct examination, but on
cross examination, he was too argumentative and did not answer
questions in a straightforward way,” said Jacob Zamansky of
Zamansky and Associates, a New York law firm that represents
victims of securities fraud.

Skilling and Lay have both contended Enron was a healthy
company through August 2001, when Skilling resigned as CEO, but
was brought down by a group of investors who worked together to
pressure the stock after it was revealed former Enron chief
financial officer Andrew Fastow skimmed millions of dollars
from the company.

That argument has come under attack by prosecutors, who
brought in several former Enron executives to testify the
company had hidden billions of dollars in debt while inflating
profits to meet Wall Street expectations.

Nearly all those witnesses have pleaded guilty to crimes at
Enron and are cooperating with prosecutors in exchange for
lighter sentences than they faced had they been convicted at
trial.

“For him to be acquitted, the jury’s got to buy his story
and discount everybody else’s,” said Michael Wynne, a former
federal prosecutor now in private practice who has been
involved in civil lawsuits against Enron.

Petrocelli and lead prosecutor Sean Berkowitz finished
final questioning of Skilling Thursday morning, with each
seeking to counter the other’s points before the former
executive returned to his seat at the defense team’s table.

Skilling described under questioning by Petrocelli how
Enron had fared well on an internal study on whether it could
withstand “extreme” events in its business, including a nuclear
plant accident, high powered hurricanes in the Gulf of Mexico
or a credit collapse in the industry.

“Frankly I was surprised at the outcome,” Skilling said.
“We felt we were in a good liquidity position,” he said.

Skilling did become visibly uncomfortable on the stand as
the prosecutor returned to questions from earlier in the week
about an investment Skilling made in an Internet photo business
that had contracts with Enron and was run by a former
girlfriend and ex-Enron employee.

Skilling admitted his investment in the company,
Photofete.com, appeared to violate Enron’s ethics policy
because he never disclosed it to the board of directors.

Although Skilling faces no criminal charges for that
investment, Berkowitz used the incident to try to undermine
Skilling’s credibility.

“When we started this thing, I think we agreed the most
important thing the jury had to rely on was your word,” he said
to Skilling.

“Yes, that’s right,” Skilling answered.

During the afternoon session, Skilling’s lawyer called
several character witnesses to the stand, including his former
wife, the widow of his former best friend and Enron executive
Cliff Baxter and a former Houston fire chief.