After spending four days on the witness stand defending himself, former Enron Corp. CEO Jeffrey Skilling finally appeared to have had enough on Thursday. He angrily accused the government of “rewriting history” and of trying to pin the blame for the company’s collapse on “innocent people.”
Skilling is charged with 28 counts of fraud and conspiracy; Enron founder Kenneth Lay is being tried on six counts and may testify later this month. Although he remained composed throughout his testimony, Skilling became visibly angry as his lawyer Daniel Petrocelli continued to ask him questions about the government’s accusations against him.
Petrocelli used a large projection screen to go through the indictment. Referring to one of the charges, Petrocelli asked Skilling if he had misled investors about the financial condition of Enron Broadband Services (EBS) and Enron Energy Services (EES) during a March 23, 2001 conference call.
The charges are “absurd…it’s just not true,” Skilling claimed. “I think they [the prosecutors] have purposely not looked at the facts they should have looked at to come to a more balanced and accurate conclusion.” Skilling said he believed then, and he still believes, the company was in good shape. EBS and EES were part of Enron’s future, he asserted.
Petrocelli continued reading through the charges, but Skilling interrupted him. Reading from the indictment flashing on the screen, Skilling sarcastically said, “As Skilling knew…I’m sorry. 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…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,” Skilling told jurors.
“We used to have a saying, ‘bleeding Enron blue.’ I bled Enron blue. We were in fact having some of the best financial performance in the history of the company…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…I know a lot of people at Enron Corporation who will never recover from what’s happened.”
The government’s case, Skilling said, is not balanced in its conclusions about what led to Enron’s bankruptcy.
“The reasons for that failure would be clear if people looked at it fairly,” Skilling said angrily. The prosecutors’ version of what happened is “inconsistent with what really happened at the company.”
After taking some time to calm down, Skilling turned to the jury and said, “I am not happy about these accusations.”
As Enron’s stock price fell in 2001, Skilling claimed “short sellers colluded” to bring Enron down by issuing “misinformation” to the press, and said they “worked together” during Enron’s conference calls in mid-to-late 2001 to raise doubts about the company. “We knew they were attacking our stock. I thought it was inappropriate.”
But Skilling acknowledged not all short selling was bad.
“Anytime we were selling products like natural gas to a consumer and went out to cover that, we were shorting it. There’s nothing wrong with an individual short selling stock. I think it’s beneficial to the market place.”
Later, Petrocelli turned to a comment by former EES COO Kevin Hannon during his testimony in March. Hannon told jurors about a meeting in May 2001 to discuss Enron. At the meeting, executives reviewed a report published by Off Wall Street Consulting Inc., which wrote Enron’s stock price was worth about $27/share, or about half of its value at that time.
“They’re on to us,” Hannon quoted Skilling as saying.
“I know you’re outspoken, but are you that outspoken?” Petrocelli asked.
“Yes,” Skilling said, laughing. “I don’t remember the specifics of this, but I do remember that there was this document, this analyst report,” Skilling said. “This piece of paper was very clearly a document that had been prepared by someone who was fronting for short sellers. The information in it bordered on very unusual, very strange and very incorrect information.”
Skilling said he liked to make jokes, and he may have joked about the report. Skilling recalled how he sometimes imitated a clay cartoon character from an old Saturday Night Live television skit. He then mimicked the clay character using a high-pitched voice: “Oh, nooo! Mr. Bill! Oh, nooo! They’re on to us!” Everyone in the courtroom laughed.
As Petrocelli moved closer to wrapping up his questioning on Thursday afternoon, Skilling did admit a mistake. In discussing EBS, Skilling said the business looked solid early in 2001, but by July 2001, the business unit was in trouble and was forced to fire some employees.
“This was my mistake,” he told Petrocelli. “The buck stops at the top. I’d been a supporter and supported our move into the broadband business, and I’d been wrong. We’d misinterpreted the market in the broadband business. We spent a lot of time and a lot of money going into the business. This was my failure. I made a mistake.”
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