Skilling: Enron was 'as good as it gets'
Former chief says Enron's business was performing well; lashes out at government.
HOUSTON (CNNMoney.com) - After four days of direct examination, Enron's former chief executive Jeffrey Skilling once again declared his innocence and said he was taking a stand for the company.
"If we don't do this, the books that will get written will be wrong, like the books that have been written so far," Skilling said. "I am innocent of all of these charges and I will fight for that for a long time."
Skilling testified that, with the exception of Enron's troubled broadband unit, "it was as good as it gets" for every other part of the business.
Earlier in the day, Skilling attempted to refute prior testimony that he uttered the ominous words "they're on to us" after reading an article that questioned the company's financial reporting.
Skilling said that while he may have said those words, it was done in jest. In an unusual and rather comical display, Skilling began waving his hands in the air and in a high-pitched voice said, "Oh no, Mr. Bill, they're on to us. " He meant to show the jury the way in which he might have said those words and how "foolish" he thought the article was.
He said he believed the article had been planted by short sellers eager to bring the stock down. Skilling has attributed some of Enron's weakness in 2001 to the actions of short-sellers that prompted the media to write a series of inflammatory articles about the company.
And in his first real show of any emotion on the stand, Skilling became visibly angered by government allegations that he knew Enron's broadband and retail energy businesses were failing even as he touted the two businesses to Wall Street.
Skilling called the government's allegations "absurd" and "absolutely not true." Then, as Petrocelli pressed on, Skilling said, "I'm sorry, I have to calm down a little."
Throughout his testimony, Skilling and his legal team have endeavored to present the ex-Enron chief as an affable, well-meaning fellow in order to counteract the prosecution's portrayal of him as an arrogant man so consumed by greed that he directed his lieutenants to mislead the public about Enron's true financial health.
Thursday was the first day that Skilling appeared to lose his cool.
Indeed, as Petrocelli continued to question him about the government's portrayal of both Enron and his own leadership of the company, Skilling only became more agitated.
"These are serious accusations. I am not happy about these accusations," Skilling said. "I bled Enron blue. Enron was a vibrant company that was having the best financial performance in [its] history."
Skilling added that he was devastated that the corporation "had been brought to its knees" unnecessarily by the government. He then lashed out at the government saying "I think they have purposely not looked at facts they should have been looking at to come to a more balanced and accurate conclusion."
"I know there are a lot of people that will never recover from what happened," he added. "I feel awful."
Skilling specifically responded to the government's contentions that Skilling had misled investors about the health of the broadband unit, telling employees that telecom was in a meltdown while at the same time advising investors and the public that he was confident about the division.
He denied that the broadband business had been in dire straits and said that, despite some struggles in the telecom industry, the business was "gaining traction in the buying and selling of bandwidth."
He added that his comments to employees were taken out of context. Skilling explained that the statement didn't reflect his belief that Enron's broadband unit was well positioned to ride out a tough market. He said Enron had anticipated since 1999 that the telecom market would see a drop in pricing due to overcapacity and had positioned itself to be more of an intermediary to provide data rather than a fiber provider.
Layoffs and stock sales
Skilling on Thursday also denied government allegations that he had mischaracterized layoffs within the broadband unit as redeployments in order to trick Wall Street and preserve Enron's stock price. "Layoffs were a failure of management," Skilling said, adding that when a company lays off its employees, it's admitting that it made a mistake.
Former Enron executives testified during the prosecution's phase of the trial that Skilling lied to analysts on conference calls
Skilling also tried to explain the series of stock sales leading up to and following his abrupt resignation that the government contends were based on inside information that Enron was in turmoil.
He said all of his stock sales were automatically done through a corporate plan and he only implemented a large 500,000 share sale the day the market opened after the Sept. 11 attacks because he was concerned about the state of the stock market. While he looked into a 200,000 share sale a week before the attacks – a point that the government has highlighted – he said he didn't aggressively pursue it.
Skilling did admit that one of his failures as chief executive was his inability to sell some of the international assets that Enron's former financial chief Andrew Fastow testified were in turmoil by 2001. But he denied that Fastow's assertion that the international assets added between $5 billion to $7 billion in imbedded losses to the company's balance sheet.
He testified that he believed Enron would only get $5 billion for those assets at that time – well below what they were worth – and suggested that Enron hold on to the assets until the company could get a higher price.
Enron founder Kenneth Lay and Skilling, who together face nearly three dozen fraud and conspiracy charges, are accused of lying to investors about the company's financial state while they enriched themselves by selling millions of dollars in stock.
Legal experts say the defendants could face 20 to 30 years behind bars if convicted of the charges. Lay will also face an additional trial for fraud once the current trial in Houston is over.
Enron was once the seventh-largest corporation in the U.S. It declared bankruptcy in December 2001, costing 4,000 employees their jobs and resulting in billions in losses for investors.
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