Dozens of journalists from around the country waited in Houston Thursday for ex-Enron Corp. CEO Jeffrey Skilling to take the stand in his defense. The wait proved long and ultimately, futile. Skilling now is expected to begin his testimony on Monday.
Jurors in the trial of Skilling and Enron founder Kenneth Lay instead listened to a second long day of folksy, and at times emotional, testimony by former Enron general counsel James Derrick. His cross-examination is expected to be completed on Monday, and then Skilling will take the stand.
Derrick, who was not charged in any crime at Enron, told jurors Skilling relied upon the advice of his top lieutenants during his tenure and was not required to review every business transaction. Asked about Enron’s outside accounting firm, Arthur Andersen, he explained its role in approving some of the suspect accounting transactions.
“Enron was a very, very complex company, and it was moving into areas where there was not clear guidance in accounting,” Derrick told the jury. He said Enron in 2000 and 2001 was no longer just trading natural gas but moving into new types of trading arrangements that had never been tried before. “Judgments needed to be made. Arthur Andersen consistently told the [board] audit committee they were comfortable with the decisions they had made.”
Recalling his frequent meetings with Skilling, Derrick said he and Skilling shared a strong sense of family. Derrick’s recollections of Skilling worrying about his long hours at the office helped to bolster claims by the defense that the former CEO left Enron in August 2001 not because of problems within the company but rather personal concerns.
In mid-2001, Derrick noticed a change in Skilling’s personality. Skilling had returned from a trip to England following an explosion at an Enron plant in Teeside that killed three workers.
“He seemed to me to be, I don’t know if depressed is the right word, but changed, just a different demeanor,” Derrick told the jury. Shortly thereafter, Skilling resigned, after serving as Enron’s CEO only six months.
Asking about government testimony by former Enron Broadband Services executive Kevin Hannon, defense lawyer Mark Holscher questioned Derrick about a meeting he attended with Skilling in May 2001 (see Daily GPI, March 7).
“Did you ever hear Mr. Skilling make the dramatic admission, ‘They’re on to us?’ when your office was just 20 feet away from his?”
“No, not that I can recall,” Derrick said. “I did not.”
Holscher also asked Derrick his opinion of Skilling. “Mr. Skilling…I found to be an incredibly disciplined and hard worker, always very prepared…to the extent that I observed him answering questions at board meetings. Mr. Skilling appeared to me to have a wonderful grasp of the subject matter and [he] had a wonderful grasp of the subjects that were asked of him.”
At the midday break, Skilling lead lawyer Daniel Petrocelli praised Derrick for agreeing to testify for the defense.
“He has to be applauded,” said Petrocelli. “He could have chosen to take the Fifth [Amendment] like everybody else.” Petrocelli has criticized other ex-executives at Enron who have refused to willingly testify in the case for fear of prosecution. “We urge other senior management to come here to testify. They should be here,” he said.
Skilling, 52, walking with Petrocelli outside the Houston courthouse, was asked what he thought of the 10-week-old trial.
“I’d rather be doing other things,” Skilling said. Then he looked around at the horde of reporters and added, “I have nothing to hide. I am innocent of all of the charges.”
Skilling faces 28 criminal charges on fraud, conspiracy and insider trading. If he is convicted on all counts, Skilling could theoretically receive 325 years in prison and be fined $80 million. Lay, who is expected to testify in his defense later this month, faces six charges on criminal conspiracy and fraud. Lay also was charged with four criminal counts related to his personal banking, and that trial will begin once the jury in this case begins deliberations.
To review the transcripts of some of the testimony, visit www.kenlayinfo.com.
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