washingtonpost.com
Skilling's Temper Drawn Out on Stand
Prosecutor Focuses on What Former Enron CEO Says He Doesn't Remember

By Carrie Johnson
Washington Post Staff Writer
Wednesday, April 19, 2006

HOUSTON, April 18 -- Former Enron Corp. chief executive Jeffrey K. Skilling bristled under hostile questioning from a prosecutor who accused him of improperly engineering financial results, insisting to jurors in his fraud trial that "there was no issue in meeting our numbers."

In his second day of cross-examination, Skilling accused prosecutor Sean M. Berkowitz of misrepresenting events that pushed the Houston energy trader into bankruptcy protection. At the same time, Berkowitz repeatedly called attention to what he called memory lapses and far-fetched excuses Skilling gave for being out of the loop about Enron's problems.

"You're out of town, the lights are out," the prosecutor said sarcastically as defense lawyers objected.

U.S. District Judge Simeon T. Lake III allowed the remark, saying Berkowitz was allowed one rhetorical flourish per hour.

The exchange was one of few light moments in a day marked by clashes over whether Skilling bears responsibility for optimistic public statements he made months before Enron collapsed. He maintains that there was no widespread fraud at Enron and told the jury during direct questioning last week that he "tried very hard to keep up to speed on what was happening." Skilling, 52, faces more than a decade in prison if he is convicted on 28 fraud, conspiracy, and insider-trading charges.

Known within the company for his impatience, Skilling for the first time lost his cool Tuesday afternoon, asserting that prosecutors misunderstood a technical issue. As Berkowitz raised his voice and sought to proceed, the witness responded, "Let's not move on."

Defense lawyer Daniel M. Petrocelli took the unusual step of interjecting to defuse the situation. "Is there a pending question?" he asked.

Skilling apologized, only to lash out again at the prosecutor.

"I know it is difficult for you to sit here and answer questions, Mr. Skilling, and I know at times you overreact to people who are critical of the company," Berkowitz said as Skilling shook his head, his face reddened.

Skilling regained his composure and finished out the day.

Before his temper burst Tuesday, Skilling argued that he had no inkling that his company had trouble meeting quarterly analyst earnings targets, contradicting testimony by several former insiders who pleaded guilty and took the witness stand against him in exchange for reduced prison sentences.

"I would hope we were pushing, because if you're not pushing, you're not doing the best job for your shareholders," Skilling told jurors Tuesday. "Was there any question during that time period where I thought there would be a shortfall? No. Go ahead, show me some [documents] because I don't think that's true."

Later, the prosecution continued its attacks on what it contends is Skilling's selective memory. Berkowitz put up a slide highlighting the differences in testimony by two former investor relations officials and Skilling over a last-minute move that helped Enron report earnings of 31 cents per share for the fourth quarter of 1999. Just a day before the earnings release, the government alleges, the company had prepared to report a penny less.

"I have no recollection of that at all," Skilling testified Tuesday. "I'm not sure that really happened."

After another question or two, Skilling expanded upon his answer. He said that one analyst out of 20 had increased his target, which meant the estimate increased by "0.2 cents, which happened to force a rounding up to 31."

Berkowitz shot back, "It sounds like you have a pretty good familiarity with what happened."

Skilling replied, "When I was accused of this, I went over it."

Prosecutors also questioned Skilling on Tuesday about increases in the company's earnings in the second quarter of 2000, to 34 cents from 32 cents.

Skilling said last week that he asked then-chief accountant Richard A. Causey to "shoot for 34" after learning that business units were posting "hot" results days after the quarter had ended.

Causey has not testified in the case, but the government reminded the jury about an e-mail sent by accountant Wesley H. Colwell to his boss, suggesting that Causey had told him Skilling directed the change to exceed analyst estimates.

The prosecutor also posted on a screen sworn testimony that Skilling gave to securities regulators in 2002. Then, Securities and Exchange Commission lawyers asked, "Did you ever give any instruction to anyone that you knew would cause a change in the results for the quarter?"

"Cause a change -- no," Skilling said at the time.

"That was a lie, wasn't it, sir?" Berkowitz asked Tuesday.

"That's absolutely incorrect," the witness said.

View all comments that have been posted about this article.

© 2006 The Washington Post Company