Enron Executives Prepare for Trial
SCOTT SIMON, host:
On Monday the trial of former Enron executives Kenneth Lay and Jeffrey Skilling is scheduled to begin in a Houston court. Over the course of the trail, federal prosecutors will try to explain to a jury how the energy giant collapsed in December 2001, and why they feel the defendants ought to go to jail. Mr. Lay and Mr. Skilling are accused of several counts of fraud and conspiracy leading to the implosion of Enron. Mr. Skilling faces an additional charge for insider trading. Then the defense will explain why they believe Mr. Lay and Mr. Skilling are not to be blamed for one of the biggest corporate upsets in U.S. history. Enron was once the seventh largest corporation in this country. It's collapse wiped out more than 5000 jobs and a billion dollars in retirement savings.
Joe Nocera is our friend from the business world and a columnist for the New York Times. He joins us from member station WZVE in Richmond, Virginia.
Joe thanks for being with us.
Mr. JOE NOCERA (Business Columnist, NY Times): Thanks for having me Scott.
SIMON: And a lot of expectation of drama I must say. What are we going to see on Monday?
Mr. NOCERA: Well Monday the jury selection will begin basically. But I think this is going to be a long trial, four to six months. The defendants, Jeff Skilling and Kenneth Lay, both have said they're going to testify, which doesn't always happen in criminal cases. Andy Fastow, who is the former chief financial officer and faces as much as 10 years in jail because he's plead guilty will be testifying against the. It'll be friends against friends. It will be technical explanations of transactions that we currently think of as crooked but that Mr. Skilling and Lay's lawyers think, will say are not crooked. And it has the potential to be one of the most closely watched business trials, I think ever.
SIMON: Do you think people are going to be glued to their sets the way they were for fill in the blank, the O.J. Simpson trial? Or for that matter, the O.J. Simpson civil suit because Daniel Petrocelli(ph), who represented Ron Goldman's family in that suit is also representing Jeffrey Skilling.
Mr. NOCERA: If it becomes a case revolving around personalities and allegations and who done what to whom, absolutely. Although you know one of my mantras about this case has been the more exciting it is, the better it is for the prosecution, and the duller it is, the better it is for the defense. So it's very much in the prosecution's interest to do this quickly, and not get mired in the details. And it's very much in the defense's interest to drag everything out forever.
SIMON: Give us an idea of how complicated both the evidence defense arguments might be for after all what are suppose to be a jury of your peers?
Mr. NOCERA: Enron fell because the company was essentially doing a series of transaction with itself through Andy Fastow. Mr. Fastow set up these partnerships. The partnerships were making deals with Enron. It was suppose to be a sliver of the partnerships that were owned by independent investors which were suppose to make them a legitimately arm's length transaction, which of course we all know they weren't. And Mr. Skilling and Mr. Lay are going to say day after day after day, we didn't break any rules. And any rules that were broken were broken by Mr. Fastow and we didn't know anything about them anyway. That's the fundamental defense. And the prosecution's going to say yes they did break rules and oh, by the way what was the purpose of all these transactions? Well the purpose was to discuss the fact that you were running a sick company. And you didn't tell investors, and you didn't tell analysts, and nobody knew it except you guys who were siphoning off millions of dollars in stock options and salary.
SIMON: Any time you have somebody as well known as Andrew Fastow turn state's evidence, it gives the opportunity for the defense to argue well of course he's saying that. He's trying to blame us for his problems, and he's getting a good deal out of this.
Mr. NOCERA: Andy Fastow was like a double agent. He was doing on the one hand bidding for Enron, but he was also skimming off the top. And that truly, we don't think Mr. Skilling and Mr. Lay know about. So as witnesses go, he is damaged before he even gets on the stand.
SIMON: Would the defense then be expected to argue well look running a business into the ground isn't a crime.
Mr. NOCERA: That's precisely what they'll argue. They'll argue that you know this isn't all that different from the demise of a dot com like Pets dot com. Bad business decisions are not criminal acts. What may be a criminal act is whether disguising bad business decisions through a series of possible legal transactions that add up to a fraudulent picture of an enterprise. We're going to find out if that's illegal.
SIMON: Joe Nocera, business columnist for the New York Times speaking with us from Richmond this week. Joe thanks very much.
Mr. NOCERA: Thanks a lot Scott.
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