Skilling Says He Had No Motive

Attorney Daniel M. Petrocelli, left, with former Enron CEO Jeffrey K. Skilling.
Attorney Daniel M. Petrocelli, left, with former Enron CEO Jeffrey K. Skilling. (By Tim Johnson -- Reuters)

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By Carrie Johnson
Washington Post Staff Writer
Wednesday, April 12, 2006

HOUSTON, April 11 -- In his second day on the witness stand, former Enron Corp. chief executive Jeffrey K. Skilling repeatedly denied he presided over a scheme to inflate the company's earnings and mislead investors, arguing he had no motive or need to do so because the company was strong and he was already a wealthy man.

As defense lawyers walked him through fraud, false-statements and insider-trading accusations, Skilling forcefully rejected prosecutors' arguments that he stood at the center of a conspiracy to falsely portray the energy company as a thriving business.

"Did you ever have a single conversation with anyone at Enron in which you said, you know, 'We're not cutting it; we've got to break the law?' " asked defense lawyer Daniel M. Petrocelli.

"I don't think I did anything remotely like that," Skilling replied.

He offered long explanations of Enron's business practices, intricate deals and market trends, but he once again told jurors he could not remember some of the events that form the basis of criminal charges that could send him to prison for more than a decade.

Prosecutors introduced testimony earlier in the 11-week-old trial tying Skilling to a pair of last-minute maneuvers in 1999 and 2000 used to make Enron's earnings look better than they were to meet or exceed Wall Street analyst estimates.

Skilling said he had "no recollection" of a move to bump up the company's reported earnings from 30 to 31 cents per share in the fourth quarter of 1999. "I have never been told we are going to artificially create anything," he said.

As for another alleged plan to boost earnings from 32 to 34 cents in July 2000, he said forcefully: "That is absurd. That is not true, I'm sorry, that is not true."

He said that he did not remember specifics about the finances at that time but that Enron had a "very strong" May and June 2000 before he left on an extended vacation. When he returned, he met with then-chief accounting officer Richard A. Causey, who he said told him the company's business units were "coming in really hot," or reporting better-than-anticipated results.

"I said, why don't we shoot for 34?" Skilling recalled for the jury.

Last-minute changes in the numbers do not break the law, the defense maintains, because companies constantly balance new data as they come in at the end of a financial quarter. "This is just the way the process works," said Skilling, who called himself an "optimistic person."

Meanwhile, Skilling told jurors he had been repeatedly misled by former chief financial officer Andrew S. Fastow, who siphoned millions of dollars from Enron using secretive business partnerships that were approved by the company's board of directors. Fastow pleaded guilty and provided testimony last month that implicated both Skilling and his codefendant, former Enron chairman Kenneth L. Lay. Both defendants say Fastow is a liar and a thief.

Skilling said he later learned that Fastow misrepresented how much he profited from the partnerships, which prosecutors contend were central to the alleged fraud because they helped Enron manufacture earnings and hide debt. Rather than a nefarious plot, the deals were "open," he said.

Skilling nonetheless worked to distance himself from the operations, saying he spent "probably two hours" in his tenure at Enron thinking about the partnerships. He added that he did not think he had been required to approve transactions between Enron and the partnerships because other executives were monitoring the situation, following the board's instructions.

He told jurors that he did not recall receiving a May 22, 2001, memo from an Enron lawyer asking him to sign off on the deals. Skilling said he "would not have had any problem" signing off, however.

The defense also tried to show that the transactions themselves were small potatoes. According to one document prepared by Fastow, the partnerships infused $125 million into Enron by way of six deals in eight days at the end of 1999. "I would view that as a rounding error," Skilling told the jury. "I'm not sure deals of that size would come to my attention. $125 million out of an annual calendar of $22 billion is hardly something that you would notice."

Eventually, Fastow, who had once entertained Skilling's children with toys from his office desk drawer, came to "exasperate" and "antagonize" him, Skilling said, with demands for information and aggressive e-mails. He said it was "inconceivable" that he would have guaranteed Fastow would never lose money in his dealings with Enron.

"I had no agreement with Andy Fastow that would guarantee a rate of return on a project period, full stop," he said.


© 2006 The Washington Post Company

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