Enron Update: Final Defense Witnesses Testify

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ALEX CHADWICK, host:

This is DAY TO DAY with this story coming up. In Israel, Ehud Olmert manages to form a new government. I'm Alex Chadwick.

MADELEINE BRAND, host:

And I'm Madeleine Brand. First, the Enron trial is winding down. The jury is expected to get the case in about two weeks. Ken Lay and Jeff Skilling have finished testifying. And here to give us some highlights of the trial, so far, is Houston Chronicle reporter Mary Flood. Hi, Mary.

Ms. MARY FLOOD (Reporter, Houston Chronicle): Hi, MADELEINE.

BRAND: Mary, Ken Lay just finished testifying. And, at times, he was quite angry it seemed with the federal prosecutor grilling him. What did that prosecutor say that got under Lay's skin?

Ms. FLOOD: Oh, just about everything. Lay did not like the guy. And, especially, probably his own stock sales back to the company, the $70 million or so in cash he took out of the company his last year there, I'd say was probably what got him the most angry.

BRAND: Well, tell us about that, because both he and Skilling were accused of selling personal stock at suspiciously opportune times.

Ms. FLOOD: Yes, but in different ways. Skilling is actually accused of insider trading, for selling his stock on the market; Lay is not. Lay is accused of conspiracy and of fraud for selling his stock back to the company and then misrepresenting it to others, telling others that in 2001, he bought stock net. When, in fact, he had sold $70 million worth and then only bought about $4 million worth.

BRAND: Well, I wonder how much of what the government was accusing these two men of--how much of it was, basically, trying to paint them as bad guys versus actually committing illegal acts.

Ms. FLOOD: Well, a lot of what they asked them about on the stand was trying to paint them as liars, who would, therefore, lie the way they were accused in the indictment, and as people who did not care about the code of ethics or the rules at Enron. And they want the jury, of course, to transfer that and say, therefore, they didn't care about the code of ethics and the rules of Enron under the matters under the indictment.

So the government did both. They questioned them about what they're actually accused of, and they asked them questions about things they're not really accused of; in both cases, side investments they made in a business called PhotoFete, run by one of Skilling's ex-girlfriends. That's not in the indictment, but the government used it because it goes to their questions about putting themselves above the company.

BRAND: You know, Mary, a lot was put into Skilling and Lay's performance on the witness stand. They were reportedly coached and have spent lots and lots of money on their defense. I'm wondering how they came across in the end. Did they succeed in portraying themselves as sympathetic to the jurors?

Ms. FLOOD: You know, we won't know until the jury comes back. But I think something interesting is that the jury could've found that they lied about some things on the stand, and yet still didn't commit the crime. It was clear from jury reaction, from just watching human behavior that they weren't pleased with Mr. Skilling sometimes; they would look away from him. But they could've found that they were--that they lied about some things and they could still come through. We don't really know what the people who matter thought.

BRAND: Who do you think was the most damaging witness to these two men?

Ms. FLOOD: Probably David Delainey. He works in a couple of the businesses that--the wholesale and the retail. He basically said, overall, Enron was a place where we didn't respect the rules. And then, technically, went through meetings he'd had with them, meetings he had with other people, times he said decisions were made, basically the wrong--for the wrong reasons. He was fairly extensive and they didn't make a lot of headway in him. So he was probably the most important witness against the two.

Andy Fastow, of course, was the best known. But he's such a crook that it's hard to know whether the jury took much of anything he said to heart.

BRAND: Andy Fastow, being the former CFO.

Ms. FLOOD: Yes. The former CFO who was--pleaded guilty to a couple of charges, agreed to send ten year--spend ten years in prison. His wife already spent a year in prison. He was very repentant on the stand; what he said went totally against what Skilling and Lay said. But again, he is such a crook. And he agreed that he brought his family and his wife into his life of crime. The jury may not think highly of him in any way and may not have listened to a thing he said.

BRAND: All right. And in the next two weeks, what do we expect?

Ms. FLOOD: There will be little more expert testimony and maybe a fact witness or two. Then, the government's going to put on a couple days of rebuttal. And the judge has said we are going to hear final arguments on Monday the 15th. Then it goes to the jury. They probably will decide their own hours. And most lawyers expect it'll be a week or two after that, before the jury could possibly come back, given that they have, you know, 30 something charges to go through and a lot of them are very complex.

BRAND: Mary Flood is a Houston Chronicle reporter covering the Enron trial. Thank you, Mary.

Ms. FLOOD: Thank you, Madeleine.

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