Jurors in the fraud and conspiracy trial of former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling have spent several hours getting glimpses of the duo as they were before their company crumbled in scandal, and more came Monday.
The glimpses are coming from video and audio tapes, which last an hour or more each, that have stretched the time spent in the witness chair by the government’s first witness, former Enron investor relations chief Mark Koenig. He returned for a seventh day Monday as lead Lay lawyer Michael Ramsey continued cross-examination accompanied by a videotape of Lay addressing employees two days after Skilling abruptly resigned in mid-August 2001.
Skilling quit six months after he succeeded Lay as CEO, and Lay had resumed that position.
“The company is doing extremely well,” Lay told his audience, who had greeted him with a standing ovation. He also said the company offered enormous opportunities and Enron needed to continue hiring the best and the brightest.
“If we do that, then Enron will become the leading company in the world,” Lay told employees.
Less than four months later, Enron filed for bankruptcy protection amid revelations of off-the-books debt and inflated profits. The collapse of what was once the country’s seventh-largest company left thousands jobless and wiped out billions in investors’ wealth.
Prosecutors have played clips of videos and audio tapes of Enron employee meetings and quarterly conference calls with analysts to bolster allegations that Skilling and Lay repeatedly lied about Enron’s financial health and hid bad news to inflate company stock.
But the defense teams — who say there was no fraud at Enron beyond a few executives skimming money and its implosion stemmed from negative publicity and a loss of market confidence — convinced U.S. District Judge Sim Lake to allow the lengthy tapes to be played in full so jurors would hear the comments in context.
The defense teams also say it gives jurors a feel for Enron and the defendants, including Lay’s standing ovations and Skilling’s fawning attention from analysts.
“The feel of a case is as important as the think of a case,” Ramsey said outside of court.
“The jury’s getting an opportunity to see what Enron was at the time,” Skilling lawyer Daniel Petrocelli said outside of court.
Koenig is among 16 ex-Enron executives who pleaded guilty to crimes in hopes of getting lenient punishments in exchange for cooperating with prosecutors. He pleaded guilty in August 2004 to aiding and abetting securities fraud for lying to analysts about Enron’s finances.
The defense has suggested that those executives admitted to crimes they didn’t commit because they were pressured by prosecutors and feared lengthy prison terms. Last week Koenig insisted he pleaded guilty “because I was guilty.”
Next up is another of the 16 — Kenneth Rice, a former Skilling ally who ran the company’s money-losing broadband unit that never lived up to its hype. He may begin testifying Monday.
Rice was a top trader and dealmaker for Enron and a member of Skilling’s inner circle. Skilling tapped him in the late 1990s to help run the new broadband business that emerged from a small telecom operation at an Oregon utility the energy giant bought in 1997.
Rice testified in the broadband case that he, Skilling, and four of the five executives on trial lied to analysts about capabilities of Enron’s then-fledgling broadband network when the new business was unveiled at a January 2000 analyst conference.
He said they told analysts the network was up and running when it wasn’t to generate Wall Street buzz and inflate Enron stock. Within two days of the conference, Enron’s stock price leaped from $54 a share to $72.
Skilling, 52, faces 31 counts of fraud, conspiracy, insider trading and lying to auditors. Lay, 63, faces seven counts of fraud and conspiracy. Both face decades in prison if convicted. Both also sold millions in stock before Enron filed for bankruptcy protection, but only Skilling faces charges of improper stock sales.