Former Enron CEO Skilling describes journey of pride, despair

By Carrie Johnson

The Washington Post

HOUSTON — Jeffrey Skilling, the brash, self-made executive who powered Enron to international acclaim only to watch it descend into bankruptcy protection and notoriety, took the witness stand Monday in his fraud trial to declare himself “absolutely innocent.”

Skilling, 52, admitted he was emotional, even nervous, as he stepped forward to take an oath to tell the truth during the 11th week of the trial. “I guess in some way my life is on the line.”

Defending himself against charges he lied to the public about Enron’s health and bailed when he knew the company was failing, the former chief executive took jurors on what he described as his own emotional journey, from the excitement of building one of the nation’s most powerful companies to what he called his exhaustion and distress at the toll his commitment to Enron had taken on his family.

Later, Enron’s collapse led to drinking and depression, he told the jurors.

Skilling, who earned $152 million from 1999 to his departure in 2001, said he had worked tirelessly over a decade to transform Enron from a stodgy pipeline company into a business that traded energy.

Proclaiming the firm “the finest company in the world,” Skilling told the jury “there was excitement, there was electricity” back in the days when he strode through the doors of the glass tower that once dominated Houston.

But by 2000, the long days had turned into something that was “emotionally exhausting,” Skilling said. “Some people would say I was obsessed by Enron. … I had not spent the time I should have spent in my family.”

He returned from a three-week African safari with the realization he no longer wanted to lead the company. He broached the idea with Enron founder and then-Chairman Kenneth Lay, his charming, charismatic fellow defendant who will testify later in the trial.

“I said, ‘I really hate this job,’ ” Skilling recounted, looking at Lay at the defense table, with Lay watching him. “And I think Ken said, ‘Oh no, not again.’ ” The departure was averted.

Months later, in 2001, on what he called “that fateful day, Friday the 13th of July,” Skilling’s desire to leave returned in force. He said he drafted a resignation letter and talked with his son, asking, “Would you still respect me if I do that?”

As Skilling described the moment from the witness stand, his wife, Rebecca Carter, a former secretary to Enron’s board, looked over at her stepson with tear-filled eyes.

The story Skilling told the jury Monday is counter to the prosecution’s contention that he saw Enron on the verge of collapse and decided to get out while he could, rushing to sell his stock before what he knew became public.

“The charges against me are wrong,” Skilling continued, as jurors craned forward. “I am innocent of those charges. I will fight those charges until the day I die.”

He asked for a cup of water and frequently looked out at relatives in the front row, including his wife, brother, ex-wife, two sons and his 22-year-old daughter, who left the room briefly and returned clutching tissues in both hands.

Skilling, wearing a gray suit, white shirt and a blue and green tie, offered few glimpses of the arrogance for which he was known inside the company and which he displayed in testimony before Congress in 2002, just months after employees lost billions of dollars in retirement savings and Enron had become synonymous with fraud.

He broke down on the witness stand when asked about Enron workers, saying the company’s demise left him feeling like “you wanted to die.” He made reference to days when he could not get out of bed and to episodes of heavy drinking in late 2001.

Skilling also acknowledged he had by 2001 become a “lightning rod” for criticism, particularly of Enron’s role in the energy crisis that caused widespread blackouts across California, and for calling an analyst a profanity, which he said “was used as an example of arrogance or something. It wasn’t meant that way.”

After he left Enron, Skilling said, he had planned to launch charitable ventures and lined up plans to teach at New York University, Rice University and business schools at Harvard and the University of Virginia. He had been asked to be on the board at the Federal Reserve Bank in Dallas and had accepted a post as a trustee at his alma mater, Southern Methodist University.

Under questions from his attorney, Daniel Petrocelli, Skilling’s voice grew stronger and he gestured toward the jury as the day went on, spending more than an hour describing technical aspects of the business.

But he only briefly addressed two issues likely to be the focus of what is expected to be blistering days-long cross-examination: his stock sales in 2001 and his contention that Enron was fiscally sound just months before it collapsed into bankruptcy protection.

Skilling said he suspended a plan to sell personal shares of Enron stock in June 2001 because he thought the stock price had dipped “too low.”

As for his attempt to sell 200,000 shares of Enron stock Sept. 6, 2001, Skilling said he could not remember the event, despite the fact prosecutors had presented the jury with tapes of the call and testimony from his then broker at Charles Schwab.

“I guess — that transcript, I just don’t remember that,” Skilling said Monday. Under oath in 2001, Skilling told securities regulators the only reason he sold stock was because of the Sept. 11 attacks, an issue he claimed he had “agonized over.”

He said “not in my wildest dreams” did he know Enron would plummet into bankruptcy. Instead, Skilling said most of its businesses were sound and that where there were problems, they were being repaired. “I know of no reason why Enron would resort to fraud,” he said.

Despite efforts to focus on his family, Skilling said he felt compelled to listen to an Oct.16, 2001, earnings conference call in which Lay announced a pair of writedowns that amounted to more than $1 billion. Skilling told the jury in all he was “thrilled” with the company’s progress that day.

Investors, however, were not. The call sparked a series of negative news reports that led Skilling to contact Lay and other Enron insiders to urge them to “open the kimono,” or share information with analysts and reporters about corporate operations, including partnerships run by finance chief Andrew Fastow.

“Once this stuff starts, it’s like a wildfire,” Skilling said. “Unless you put it out quickly, it can consume you. … If people don’t think you can perform on your contracts, then you’re out of business.”

A week later, Skilling listened to another conference call led by Lay, monitoring the stock price on a computer screen in his den. “I called up Ken, said you gotta bring me back.”

Another executive came to Skilling’s home to discuss the prospect. But after waiting all night by the phone, Skilling heard nothing. He called Lay the next morning and was told the idea had been nixed.