Former Enron Corp. CEO Jeffrey Skilling used to have a lot of trouble keeping his mouth shut. Known for being brash, opinionated and at times foul-mouthed, he used to boast that Enron would be the world’s largest company. However, since resigning in August 2001, Skilling has been mostly silent, seen more often in the gossip pages for his public behavior than talking about the charges against him. Next week, however, he will tell his side of the story.
Standing outside the U.S. District Courthouse in Houston on Wednesday, Skilling told the horde of reporters, “I’d rather be doing other things. I have nothing to hide. I am innocent of all of the charges.”
After Enron declared bankruptcy in December 2001, and well before he and Enron founder Kenneth Lay were charged with fraud and conspiracy, Skilling, a Pittsburgh native and trained mechanical engineer, denied having intimate knowledge of the dubious financial transactions that helped to bring the company down. His confidence high, Skilling, unlike Lay, did not take the Fifth Amendment when he testified before Congress in February 2002. He told a House subcommittee that when he left Enron, “I absolutely and unequivocally thought the company was in good shape” (see Daily GPI, Feb. 8, 2002).
He told Congress he “was not aware of any financial arrangements designed to conceal liabilities or inflate profitability.” The special purpose entities (SPEs) run by then-CFO Andrew Fastow were “commonplace in corporate America,” he told the House Energy and Commerce Committee. When he was at Enron, Skilling said he “believed at the time there were adequate controls in place to manage [the] conflict of interest” in Fastow’s dual roles as manager and investor in the SPEs, and “the controls were being complied with.”
Enron’s bankruptcy, he said, followed a “classic run on the bank…a liquidity crisis spurred by a lack of confidence in the company.” When Enron collapsed, “the company was solvent, the company was highly profitable enough, but apparently not liquid enough.”
Skilling also scolded members of the Senate Commerce Committee who implied he might be responsible for Enron’s collapse.
“Common decency suggests that I be treated as innocent until proven otherwise,” he said. “Common sense suggests that accusations made now before the facts are in are likely to be wrong.”
Since Skilling spoke those words four years ago, more than 20 of Enron’s former top executives have pleaded guilty to various crimes at the company. Fastow, who is expected to spend 10 years in prison on fraud and conspiracy charges, is cooperating with the government. Richard Causey, former chief accountant — and who had been scheduled to go to trial with Skilling and Lay — pleaded guilty in December to fraud and conspiracy and is cooperating with the government.
Although the prosecution has never offered a “smoking gun,” in the form of emails or memos linking Skilling to some of the alleged wrongdoing, many of the government’s witnesses — nearly all of them former top Enron executives — offered testimony against Skilling, who served as COO and president prior to his promotion to CEO in January 2001.
When he takes the stand, Skilling will be defending himself against statements that appear to implicate him, including this testimony:
Skilling most likely will take the stand Monday following testimony by defense witness James Derrick, Enron’s former general counsel. How the jury relates to him is anybody’s guess. Skilling is defending himself against 28 criminal counts of fraud and conspiracy; Lay is being tried on six counts.
But the truth is on his side, said lawyer Daniel Petrocelli. “Jeff Skilling has nothing to hide,” he said. “He did not steal, he did not lie, he did not take anyone’s money.”
“I was not running from Enron Corp.,” Skilling told the Houston Chronicle two weeks after Enron declared bankruptcy. “We built a great company. We were doing great things. We were creating markets where markets didn’t exist.”
Now Skilling has to convince a jury that he and his lawyer are right.
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