Lies, conspiracy debated at Enron trial



By Rob Lever
AFP
HOUSTON
Petroleumworld.com 02 01 06

A prosecutor at the Enron fraud trial said Tuesday that its former chief executives "told lie after lie" to conceal financial woes, but a defense lawyer argued there was "no evil" and "no conspiracy."

Opening statements from the prosecution and defense launched the much-awaited trial of Kenneth Lay and Jeffrey Skilling, accused of engineering a massive fraud at the energy giant that led to its 40 billion dollar meltdown in 2001.

Assistant US attorney John Hueston told the federal court jury of eight women and four men that the issues are simple, despite the complex schemes revealed at Enron.

"This is a simple case. It is not about accounting. It is about lies and choices," Hueston said as the case got underway against the two former Enron CEOs.

He said that Lay and Skilling, "two men at the helm of the company, told lie after lie about the company's financial condition" to enrich themselves even as the company was on the brink of imploding.

In response, defense lawyer Daniel Petrocelli said that the evidence would show there was no "massive criminal conspiracy" as prosecutors alleged, but a "tragedy" of a cash crunch that led to the company's failure.

"I don't think I heard the word conspiracy," he said in his opening statement for the defense. He said Skilling "never ever led any criminal conspiracy; he wasn't part of any criminal conspiracy.

"It wasn't a case of 'see no evil, hear no evil,' it was a case of there was no evil."

Both Lay, 63, and Skilling, 52, have indicated they will testify during the trial, which culminates a four-year investigation into a case that for many symbolizes corporate misdeeds and excess greed.

The jury was selected Monday in a quick opening for the trial, which is expected to last some four months.

Petrocelli said Skilling was eager to defend himself in the case.

"This man will take the stand," he said. "He will tell you in his own words how much he loved this company, how he built this company, and how he would never do anything to hurt this company."

Michael Ramsey, Lay's chief attorney, said in his argument that authorities were seeking to criminalize everyday business decisions.

"Ken Lay has and will continue to accept responsibility for the bankruptcy of Enron," Ramsey said.

"He was the man at the controls at the time the company failed ... but failure is not a crime. Bankruptcy is not a crime."

Ramsey said Enron's failure came as partners cut off credit after losing confidence in the firm.

"The odor of the wolf got into the flock and the flock stampeded," he said.

The defense lawyer said many of the problems could be traced back to chief financial officer Andrew Fastow, seen as the architect of Enron's special entities to keep debts off its balance sheet.

Fastow "was a wonderful financial guy; he was a crook, he was a thief," Ramsey said.

But Ramsey mocked the notion that Fastow had "handshake" deals with Enron's top executives.

"If it's not in writing, it doesn't count," he said.

Hueston said the prosecution would show the multitude of schemes and deceptions used by Enron and its top executives to make the company's financial condition appear sound despite massive losses.

"To the outside world, Enron appeared to be a picture of corporate success ... a seemingly magical ability to make earnings growth of 15 to 20 percent year after year," he said. "But inside the doors of Enron, something was terribly wrong."

Hueston described the company transferring losses from its money-losing retail energy operation to another division to hide them; using phony deals to sell assets such as troubled power plants; and engaging in so-called "earnings management," tapping reserves improperly to make profit targets.

Lay and Skilling, the prosecutor said, knew about the fiascos Enron faced in some ventures such as water treatment, high-speed Internet, retail energy and international power generation, but kept investors and analysts in the dark.

Hueston said both men enriched themselves while leaving investors in the dark.

| He said that from 1999 to 2001, Skilling received some 150 million dollars and Lay over 200 million dollars, much of it in the form of Enron stock, and that the value of their compensation was tied to that of Enron's stock.

AFP 01/31/06

Copyright © 2006 AFP. All rights reserved

 

 

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