Skilling Testimony at Odds with Prosecutor's Facts

Former Enron Chief Executive Jeffrey Skilling's first day of cross-examination saw him defend his sale of millions of dollars in Enron stock. He also repeatedly denied that he advised his ex-wife and girlfriend to sell their Enron stock, too.

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STEVE INSKEEP, host:

The former CEO of Enron, Jeff Skilling, endured his first day of cross-examination in Houston.

Prosecutor's focused on Skilling's stock sales in the last year and a half of the company's existence. Skilling reaped more than 60 million dollars from those sales, and prosecutors suggested that he sold his shares because he knew the company was in trouble.

NPR's Wade Goodwyn reports.

WADE GOODWYN reporting:

The heart of the government's first day of cross-examination was $63 million dollars in stock sales Jeff Skilling made in the last 18 months of Enron's life. Skilling, his ex-wife, and Skilling's girlfriend, all executed multi-million dollar sales of stock after one particularly large Enron business effort fell to pieces.

Assistant U.S. Attorney Sean Berkowitz asked Skilling if he'd advised the women in his life to sell their stocks based on his inside knowledge. Skilling denied it and repeatedly asserted that the timing of all of the sales was a coincidence. After a break in the trial, Skilling tried to make light of the prosecution's allegations and told the court that his brother's had approached him during the recess and asked why he hadn't advised them to sell their Enron stock for millions. Many in the courtroom laughed, but Berkowitz wasn't amused.

Berkowitz then managed to get both Skilling and former Enron chairman, Ken Lay, in his sights at the same time.

A couple of days after Skilling announced his sudden and unexpected retirement in August of 2001, Enron whistleblower Sherron Watkins wrote to Ken Lay to warn him that the company was about to implode in scandal. In her memo, Watkins accused Skilling of leaving Enron not because of family reasons, but because he knew the truth about the dire straits the company was in, financially.

Lay met with Skilling just hours before he was to discuss these accusations with Watkins. Berkowitz asked Skilling if Lay had mentioned the Watkins memo or his upcoming meeting with her. Skilling replied that the subject hadn't come up.

Berkowitz feigned incredulity. Then he asked Skilling, if the situation were reversed and he'd gotten a letter waning him about Ken Lay and a company on the verge of financial collapse, might he have mentioned that to Lay? Asked him to explain? It was a trap. No matter what answer Skilling gave, it would make both him and Lay look bad.

For the record, Skilling said he probably wouldn't have mentioned Watkins' allegations to Lay either.

Later, Berkowitz surprised Skilling with charges of impropriety that had nothing to do with the indictments Skilling faces. The prosecutor described how Skilling had invested thousands of dollars in his ex-girlfriend's photo company that did business with Enron. Berkowitz asked if he had mentioned that little detail to Ken Lay or Enron's board of directors. Skilling admitted he had not. Well isn't that a violation of Enron's code of ethics, Berkowitz pressed? It may be, Skilling replied.

Skilling tried to defend himself by saying he'd invested only a small amount, 60,000 dollars. So 60,000 dollars is a small amount to you? Berkowitz asked? Then the prosecutor produced cancelled checks which showed Skilling had actually invested three times as much as he said he'd had in his ex-girlfriend's company: 180,000 dollars.

Is that correct? Berkowitz asked. I guess so, Skilling replied morosely.

The former Enron chief executive probably has at least two more days of playing gotcha with Sean Berkowitz to look forward to.

Wade Goodwyn, NPR News, Houston.

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