Prosecutors make most of defence’s gamble

It was a gamble putting Jeffrey Skilling, Enron’s former chief executive, on the witness stand, and it might not have paid off.

Certainly Mr Skilling conveyed his thorough knowledge of Enron, so much so he was able to argue that former staffers who testified against him had not had the full picture.

He demonstrated he was a fighter, who would have resisted the government pressure he insists 16 Enron staffers caved to in signing plea agreements in hopes of lighter sentences.

And finally, he portrayed himself as a father desperate to reconnect with his children, talking about vacations he took with them after years of neglect. Indeed, it was only after he had resigned from Enron that Mr Skilling got to take, for the first time ever, his youngest child in on the first day of school.

But it is unclear whether those images will stick in the minds of jurors who must decide whether he is guilty of fraud and conspiracy in Enron’s 2001 bankruptcy.

Under cross examination, Mr Skilling refused to give simple yes or no answers, instead accusing Sean Berkowitz, a top government prosecutor, of misrepresenting facts, showing incomplete documents and playing only partial clips of Mr Skilling’s previous comments.

He did at times succeed in parrying the prosecution’s assaults, offering explanations for actions that often made good sense. Yet it got to a point where Mr Skilling was refusing to give a straight answer to any question - something legal experts said made him look argumentative and overly defensive.

“He looked like an arrogant CEO in a board of directors meeting, not an honest witness answering questions,” said Jacob Zamansky, a legal expert.

Beyond that, he failed to provide adequate explanations in several key areas. He could not remember, for example, placing an order to sell 200,000 shares of Enron stock just weeks after leaving the company after only six months in the top job.

The order was put on hold as his broker checked Mr Skilling’s “insider” status and did not go through until after the September 11 terrorist attacks, when it was replaced as a 500,000 share sale. Mr Skilling insisted he only sold because he feared the attacks could undermine the economy.

Mr Skilling also insisted he had not colluded with his ex-wife and girlfriend to sell large chunks of Enron stock in late 2000, yet it seemed an unlikely coincidence that all three sold at the same time. During a break, Mr Skilling said in front of the jury that his brothers had said, “you didn’t tell us to sell” - a joke that may have resonated with some jurors, but might not have seemed credible to others.

Mr Skilling also insisted he had not discussed with Kenneth Lay, Enron’s former chairman and his co-defendant in the trial, the internal investigation into accounting issues that began after his departure, in spite of meeting with Mr Lay just hours before Mr Lay was to meet with the whistleblower.

And he could not recall discussions about changing Enron’s earnings to beat analyst expectations, as testified to by previous employees.

“You can’t put a witness on the stand who can’t remember,” said Joel Androphy, a legal expert. “It comes across as a conscious decision to forget.”

A final weakness in Mr Skilling’s testiomony came when Mr Berkowitz proved he had lied when government investigators questioned him about his investment in an ex-girlfriend’s internet photo business.

Mr Skilling initially said he had invested only $3,000 in the venture, when he had actually invested $180,000. He had also said Enron did minimal business with the company, when Enron was its biggest customer. And he had never reported the conflict to the board, in violation of its ethics code.

“Somebody who was willing to mislead or ignore the rules on these smaller issues would certainly be willing to resort to similar tactics when it came to matters of greater significance,” argues Robert Mintz, a legal expert.

In the end, however, that will be the jury’s decision to make.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.