Case Against Former Enron Exec Heads to Supreme Court
The case against convicted criminal and former Enron CEO Jeff Skilling will be heard later this year by the Supreme Court, the Court announced this week. Skilling was found guilty in 2006 of conspiracy, securities fraud, insider trading and lying to auditors, after numerous witnesses from the now-defunct company tied him and then-Chair Ken Lay to numerous misdeeds resulting in the company’s collapse.
Among the massive evidence against Skilling at the 2006 trial was testimony by former Enron executive David Delaney, who put Skilling in the room when one of the company’s more illegitimate accounting tricks was devised. Skilling also repeatedly insisted that he could not be held accountable for Enron’s demise, since he was not able to keep up with all of the company dealings given the sprawling nature of the business. At a Congressional hearing on the Enron affair, Congressman Ed Markey of Massachusetts derided Skilling’s story as a “Hogan’s Heroes defense: I see nothing, I know nothing.”
But Skilling wasn’t always so ready to minimize his role as Enron’s CEO. During a 2001 SEC investigation of Enron, Skilling assured regulators that he was certain that nothing was improper or illegal at the company. When the SEC suggested the company had used cash reserves to lift earnings reports and meet Wall Street expectations, Shilling flatly denied the accusation, and stated that the company never scrambled to meet quarterly expectations. But at trial, Skilling acknowledged a reserve fund was used to cover losses; former accountants at Enron said the reserves were used as a “cookie jar” to help pump up the numbers.
At the 2006 trial, Skilling and Lay were repeatedly characterized by former Enron executives and accountants as being fully in charge of the financial shenanigans perpetrated by the company. During the trial, the Houston Chronicle reported on testimony by a former Enron Treasurer regarding “lie after lie after lie” perpetuated by Skilling and Lay, and of “meeting after meeting, discussion after discussion in which the two fallen executives directed Enron’s financial schemes.” The Chronicle noted that testimony by eleven former Enron executives and staff essentially matched, while only Lay and Skilling recalled events differently. “If we are to believe Lay and Skilling,” the paper noted, “everyone else is lying.”
Skilling left Enron in 2001, just months before the company’s sudden crash, claiming the classic desire to “spend more time with my family.” But prosecutors at the 2006 trial countered that Skilling knew Enron was in serious trouble, and that he considered a CEO job at Lucent shortly after resigning.
For a riveting account of the Enron scandal, read Kurt Eichenwald’s Conspiracy of Fools.