Skilling Grilling

I have been paying attention to it, but I haven't written enough about the ongoing Enron trial, a local case that really does have national importance, as Enron-style business management has sadly become more of a role model in the ethical free-fire zone that is Wall Street. This week it's Jeffrey Skilling's turn to face the prosecution, having just wrapped up a week of testimony proclaiming his innocence. The prosecution pounced on a number of incidents of suspicious behavior in the months leading up to Enron's collapse:

The prosecutor focused on a number of areas in questioning that could last all week, including Skilling's stock sales, which are an element of the indictment against him, the international sales of Enron assets that never took place during his tenure at the former energy-trading giant, and alleged conflicts of interest.

In a line of questioning that had jurors riveted, Berkowitz focused on an investment Skilling made in a startup company called Photofete, a photo-sharing service organized by a woman Skilling knew as a photographer at Enron.

His investment, he testified, was small, about $60,000. The company's contract with Enron also was small, maybe $3,000, he told the Securities and Exchange Commission.

But canceled checks, plus a copy of a wire transfer order Berkowitz entered into evidence, showed Skilling invested $180,000 over a yearlong period beginning in April 2000.

Records also showed Photofete, which jurors learned was headed by a woman Skilling acknowledged dating, had some $450,000 in business, more than half of it with Enron. The energy company by far was its largest customer

[...]

Berkowitz challenged several statements Skilling made last week under questioning from Petrocelli. Among them was Skilling's insistence that his Enron stock sales that grossed $63 million in 2000 and 2001 were proper.

Another questioned Skilling's assessment of the worth of Enron's hodgepodge of international assets when he abruptly resigned from the company in August 2001, four months before it filed for bankruptcy protection.

On the stock sales, Skilling testified last week he didn't remember telling his broker to sell 200,000 of his Enron shares less than a month after he resigned.

That sale was held up, and Skilling ended by selling 500,000 Enron shares Sept. 17, 2001, the first day the markets opened after the terrorist attacks.

Prosecutors contend he ordered the Sept. 17 sale because he knew Enron was in financial trouble, not because of markets disturbed by the attacks.

Skilling said he'd forgotten about trying to order the sale of 200,000 shares Sept. 6 that year until he heard his voice on a tape recording played for jurors of a call to his broker.

I expect Skilling to continue to flop around like a fish like this for the rest of the week. The guy made $63 million on Enron stock at the last possible minute before the company collapsed. He was the head of the company, and he claims that he had no idea it was heading into instability. It's The Homer Simpson defense all over again: either Skilling and Kenneth Lay are lying, or they're incompetent. I've actually written about this before, in July of 2004, when these guys did their perp walk:

In other words, I was the leader of the company, but I had no idea that the company was illegally increasing its market value through bad accounting, even though that was the entire modus operandi of the company. Lay was the public face of the company; he was the one who talked to investors about the state of affairs and future prospects. And he was clearly explaining to everyone how good things were going, when in fact the company was on the verge of disaster. So his actual defense is that he wasn't lying, he was just stupid! The head of the company didn't know what was going on at the company? Why do I have trouble believing that?

I wish that some national Democrats would bring up Enron again. This is such a lost opportunity. This kind of business behavior still exists at the highest level, with plausible deniability, accounting film-flamming, and profiting off of the gullibility of American taxpayers. Skilling and Lay will get their justice due, but we need to talk about how Enron set the example that far too many other corporations seem destined to follow.