Former Enron Corp. executive Jeffrey Skilling may appear to seethe at times when pressed by prosecutors in his fraud and conspiracy trial, but he got a good review from his co-defendant who aims to testify next week — company founder Kenneth Lay.
“I think Mr. Skilling did a great job today,” Lay said Tuesday after Skilling wrapped up his sixth day in the witness chair. The ex-CEO was to resume testimony Wednesday.
“He may have had a few trick questions, as he said, but I think he did a fine job on all of it,” Lay said.
Skilling, who Lay tapped to lead Enron’s transformation from a staid pipeline company to an energy giant throughout the 1990s, held his temper for the most part. But at times he heatedly sparred with prosecutor Sean Berkowitz.
Skilling occasionally answered with sarcasm or tried to give lengthy explanations, only to have Berkowitz demand a “yes,” “no” or otherwise concise statement, to which the ex-CEO would say, “OK.”
In one instance, Berkowitz pointed out a script for an April 2001 conference call Skilling conducted to discuss that year’s first-quarter earnings. Enron’s investor relations department produced such scripts for Skilling to read.
But when he read it, he skipped a portion that said Enron’s broadband unit — which Skilling had highly promoted to Wall Street — expected a 2001 loss of up to $100 million rather than the $65 million the ex-CEO had forecast in January that year. Prosecutors say he knew the broadband unit was flailing when he touted it, which Skilling denies.
Berkowitz asked if Skilling could choose to leave something out of a script.
“Yes,” the ex-CEO eventually said. He then said, “Sometimes I would add and subtract words form the script.”
Prosecutors allege Skilling and Lay repeatedly lied to investors and employees about Enron’s health, using false optimism to hide weak business ventures and accounting tricks to obscure debt and inflated profits.
Skilling is charged with 28 counts of fraud, conspiracy, insider trading and lying to auditors, while Lay faces six counts of fraud and conspiracy.
The two defendants say no fraud occurred at Enron, and that the company spiraled into bankruptcy protection in December 2001 because of bad publicity and lost market confidence.
There was a more heated exchange earlier Tuesday when Skilling insisted that Enron did not dip into reserves to pad earnings when business units failed to meet income targets. Several prosecution witnesses testified that they felt pressure from Skilling to use reserves that way when such funds are supposed to be used for specific expenses, like litigation costs.
Berkowitz displayed for jurors a chart that showed more than $1 billion in reserves were “available for earnings,” and Skilling said he misinterpreted the document.
“You misunderstand how reserves are calculated, approved and set,” Skilling said.
Berkowitz suggested they move on to another line of questioning, but Skilling snapped, “No, let’s not move on. Let’s talk about the financial reports.”
The ex-CEO continued saying the document had nothing to do with reserves set aside for supposed improper purposes, but Berkowitz cut him off again.
“I know it is difficult for you to sit here and answer questions, Mr. Skilling, and I know you at times overreact to people who are critical. But if you could just let me ask the questions, and we’ll move along, Mr. Skilling.”
Skilling raised his eyebrows, cocked his head and nodded.