Former Enron Corp. CEO Jeffrey Skilling last week accused the government of trying to “rewrite history” and pin the blame for the company’s collapse on “innocent people.” Skilling, who spent four days on the witness stand defending himself, said he is “absolutely innocent” of the 28 criminal charges against him and will fight to prove his innocence “until the day I die.”

Now going into its twelfth week, the trial of Skilling and Enron founder Kenneth Lay was anything but dull last week. Lay, who may testify later this month, faces six fraud and conspiracy charges, and he will face seven charges on personal banking fraud once this trial concludes. But last week, it was all Skilling.

In his testimony, Skilling often demonstrated to jurors that he knew many of the smallest details about Enron’s vast operations and insisted he knew nothing about any of the alleged criminal activity that occurred while he was at the helm. However, Skilling also suffered at times from selective memory lapses, and he admitted to making some “honest mistakes” in misstating financial facts during conference calls with financial analysts.

His lawyer Daniel Petrocelli used a large projection screen in the courtroom to walk his client sentence-by-sentence through the government’s indictment. Skilling’s account of what happened during the time the government alleges he led a conspiracy to deceive the public — between 1999 and his resignation in August 2001 — sharply contrasted with testimony from many of his subordinates.

And by Thursday, after answering the charges to yet another indictment, Skilling’s anger at being prosecuted was evident. As the words of the indictment flashed on the screen, Skilling was asked whether he lied about Enron’s financial health and two of its business units during a conference call with analysts on March 23, 2001.

“I think [the prosecutors] have purposely not looked at the facts they should have looked at to come to a more balanced and accurate conclusion,” Skilling told jurors.

According to the indictment, Skilling lied during the call to boost Enron’s flagging stock price. But Skilling said he believed then, and he still believes, the company was in good shape. The two units he is accused of lying about — Enron Broadband Services and Enron Energy Services — were part of Enron’s future, he asserted.

Petrocelli continued to lead him through the indictment line-by-line. Skilling became more agitated, and he interrupted his lawyer.

“I’m sorry,” Skilling said. “I have to calm down here a little bit…These are serious accusations.”

“Is it difficult to contain how upset you are?” Petrocelli asked.

“Yes, at times,” said Skilling. “This is a total misrepresentation, in my view, of the state of events that was occurring at the time, and I think it would be very easy for someone to confirm that if they had any interest in confirming that.”

“I bled Enron blue,” said Skilling. “I am devastated because the company that was a fine corporation was brought to its knees, in my view, unnecessarily, and I’m devastated by that. Subsequently, the damage that created the horrific failure of the company has been made worse by these sorts of inaccuracies…There are a lot of people at Enron Corporation who will never recover from what’s happened.”

Last Monday, Skilling said he was excited and proud to work for Enron, a job he took in 1989.

“You walked in the front door of the lobby, and there was excitement. There was electricity,” he said. He told jurors about Enron’s “early years,” when his “gas bank” idea was formed — launching Enron toward explosive growth in natural gas and power markets. “We were making the world better, in my opinion. That company was a fine company.” He said “amazing people” had worked at Enron, and he thought they were “changing the world.”

Skilling, 52, said, “That company meant a lot to me personally… I had seen it grow, I had seen it change. I was immensely proud of that company.”

Throughout the week, Skilling stepped down from the witness chair and used a large sketch pad to explain how Enron worked. Enron was not just an energy merchant business, he explained. “Enron was much more than a trading company. We didn’t have a position, a large position, in the underlying commodity.” Skilling said if prices went “up or down,” it “didn’t matter.” He once told an analyst, “you just don’t get it.” And he reiterated that statement last week.

At Enron, said Skilling, the only two numbers that accurately estimated the company’s worth were “volume and head count.” Explaining the concept to the jury using a large sketch pad, Skilling said “simple” statistics other businesses used, such as “sales,” did not accurately assess Enron’s true value. Because Enron used hedging to lock in prices in volatile gas markets, other factors had to be used to determine Enron’s financial strength.

Skilling was at times masterful in recalling how he had transformed the gas pipeline business into the seventh largest company in the world. He remembered minute details of strategy meetings and personal discussions with subordinates and Lay. But at other times, Skilling couldn’t remember the details of other business decisions. His memory lapsed on several key points:

His attempt to sell 200,000 shares of Enron stock before Sept. 11, 2001.

Involvement in adjusting 4Q1999 earnings from 30 cents/share to 31 cents to meet Wall Street estimates.

Conversations with ex-CFO Andrew Fastow about some of the alleged illegal special purpose entities (SPEs), including hedging one of Enron’s telecommunications stocks.

For many of Petrocelli’s questions, Skilling confronted some of the most damaging allegations with a simple answer: “No.” Skilling testified he never lied, he never told others to lie, he didn’t know anything about Fastow’s alleged illegal side deals, he was not consumed by greed.

In sworn testimony to the Securities and Exchange Commission in December 2001, Skilling testified he only tried to sell Enron stock because of the Sept. 11 terrorist attacks. His broker testified for the government, and a taped phone conversation proved, that Skilling had actually tried to sell 200,000 shares of Enron stock on Sept. 6, 2001. His response: “I don’t recall….I don’t remember that.”

Although he had clear recall of other meetings to discuss Enron’s quarterly earnings, Skilling didn’t remember talking with subordinates about approving adjusted earnings in the final quarter of 1999. Several ex-executives said he did. “I have absolutely no recollection of that occurrence,” Skilling said.

And Skilling said he made an “honest mistake” in telling Wall Street analysts in July 2000 that Enron Broadband Services sold $50 million of unused fiber optic cable — when it had sold a lot more. Skilling said he was confused about the accounting method used for the cable.

“I, for some reason, thought we were treating dark fiber as an asset, not a commodity,” Skilling told jurors.

When he referred to “big, big numbers” in a 1Q2001 conference, Skilling said he was talking about the company’s “square footage” office growth, not earnings.

Of the LJM partnerships, which were directly run by Fastow to move Enron’s business losses off of its balance sheet, Skilling said he didn’t consider them important to Enron’s business.

“There were a lot of other things going on at the company,” Skilling told jurors. “This was not much of what was going on at the company.” He said he spent only a few hours throughout his time at Enron on the LJM1 and LJM2 SPEs. Of the top “100 things” he worked on at Enron, “this would not be on the list.”

“I was not of the opinion that I had any direct oversight of LJM transactions,” Skilling said. Shown an LJM transaction approval sheet with his signature, Skilling said, “It was probably in my in-box…I looked at it and signed it.”

Witnesses testified Skilling left Enron as it was nearing bankruptcy, but Skilling said otherwise.

“The effort that goes into creating a company like that, the time that you spend…and I guess partly my personality — I was immersed in Enron, some people would say, I was obsessed with Enron…,” “I was emotionally tired. I put so much of my life into it. Every day was emotionally intense. I had not spent the time that I should have spent with my family.” He said, “For a number of reasons in the year 2000 and 2001, I concluded that balance [between business and family] was totally out of whack, and it had to change.”

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