Former Enron boss takes stand in fight 'to death' to clear name
Tuesday 11 April 2006
As he took the stand to defend himself against 28 counts of conspiracy and securities fraud, Mr Skilling painted Enron as a robust company brought down, not by fraud committed on his watch, but by panic among the company's creditors after he left.
It was an intimation of his own mortality, rather than a premonition of Enron's imminent collapse, that led him to quit suddenly in 2001, he told the jury in Houston, Texas, yesterday. And in one of the most startling revelations of the trial so far, Mr Skilling said he had suggested that the board re-hire him to restore the confidence of Wall Street in the weeks before the company went under.
Adopting a humble tone that contrasted sharply with his bombastic image during Enron's pomp, he declared himself "a little nervous" about his testimony. "I guess that in some ways, my life is on the line," he said.
Mr Skilling quit in August 2001, the prosecution alleges, because he knew Enron was a house of cards built on accounting trickery. Within four months, it has collapsed under the weight of $30bn (£17bn) of hidden debt, shaking the foundations of corporate America.
But he had resigned, he said, after realising he was "obsessed" and close to burning out. A fatal accident at an Enron-owned power station helped make up his mind to spend more time with his family. "It said to me that life is short," he said. "I was changed." Mr Skilling's wife Rebecca led a phalanx of family members in court to offer support for his make-or-break testimony, which could last into next week. His children, ex-wife and other friends were also in the front row of the public gallery, and many appeared close to tears as he took the stand.
Over the past two months, the prosecution has painstakingly pieced together evidence that the fraud went right to the top, and the defence has had little choice but to put its men on the stand. Kenneth Lay, the former Enron chairman, who faces six charges, will testify in a few weeks.
The pair had transformed Enron from an old-style power company to a giant corporation trading energy on the financial markets. It was the seventh biggest company in the US at its peak, when it was valued at more than $70bn. The company was inflating profits and obscuring massive liabilities through a string of off-balance sheet vehicles set up by a Skilling protégé, the chief financial officer Andrew Fastow, who has agreed to serve a 10-year prison term in exchange for testifying against his former bosses.
The Justice Department's Enron task force has wrung guilty pleas from 19 Enron employees and advisers, most of whom are innocent, Mr Skilling claimed yesterday. He, though, was not going to agree to plead guilty. "It is not in my nature not to fight," he said. "I will fight these charges until the day I die."
Under questioning from his defence attorney, Daniel Petrocelli, he told jurors how he had "gone to pieces" as he watched the company collapse and 20,000 employees lose their livelihoods. Concerned about his drinking, friends told him to get a lawyer and a psychiatrist. "I didn't think I needed a lawyer," he said. "I got the psychiatrist before I got the lawyer." He argued that Enron had been a robust company but that short-sellers, who were betting the Enron share price would fall, created a panic by feeding inaccurate information to the press. When creditors called in their loans, the company's bankruptcy in December 2001 became inevitable.
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