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Indictment Against Enron’s Former CEO Skilling Apparently Near
A criminal indictment against former Enron Corp. CEO Jeffrey Skilling apparently may be brought to the federal grand jury in Houston as soon as this week, sources close to the U.S. Justice Department indicated Friday. The department has had various ex-executives of Enron under the microscope for more than two years, but an indictment of Skilling, 50, would be its richest catch yet.
One source told the Houston Chronicle that an indictment against the former CEO and long-time president could come on Thursday. Skilling joined Enron in 1990 and was instrumental in transforming the company from a conservative pipeline operator to the leading energy merchant in the world. Skilling had been chief operating officer for four years before being named CEO in early 2001. However, he resigned for personal reasons about six months later, just a few months before Enron collapsed into bankruptcy (see NGI, Aug. 20, 2001).
Skilling also agreed to testify before a congressional subcommittee in February 2002, and at the time, he denied knowing that Enron’s special purpose entities (SPEs) that led to the company’s collapse were intended to hide debt and boost earnings. He said in one of two appearances on Capital Hill that, “I was not aware of any financial arrangements designed to conceal liabilities or inflate profitability.” The SPE partnerships, he said, are “commonplace in corporate America.”
In response to repeated questions from House subcommittee members, Skilling said that when he left the company, “I absolutely and unequivocally thought the company was in good shape” (see NGI, March 4, 2002; Feb. 11, 2002).
Prosecutors apparently have been working with former CFO Andrew Fastow on the Skilling case. Fastow pleaded guilty in January to two fraud counts, and he agreed to cooperate with prosecutors in exchange for a 10-year sentence (see NGI, Jan. 19).
Following Fastow’s plea, prosecutors issued a six-count indictment against Rick Causey, former chief accounting officer (see NGI, Jan. 26). Fastow and Causey, who pleaded not guilty, both reported directly to Skilling. The indictment against Causey explained his alleged role in Enron’s ability to mislead investors about the financial condition of the company.
Sources also indicated that an investigation of Kenneth Lay, former chairman, also is continuing. However, no indictment was expected against Lay in the next few weeks. Neither Skilling’s nor Lay’s attorneys could be reached for comment.
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