It's the Jury's Turn
Enron chiefs Lay and Skilling placed a big bet on themselves by taking the stand. Will it pay off?
Even after Enron's collapse wiped out her 20 years of savings, Jan Fleetham was slow to blame Ken Lay, the grandfatherly figure at the company's helm. Only months later did the Bloomington, Minn., retiree come to feel that the former chief executive, like the others at the top, should be held accountable. Fleetham died of lung cancer a few weeks after Lay's indictment and never lived to see him take the witness stand in the pivotal moment of one of the most important corporate criminal trials ever.
But her daughter, Sara, a teacher in St. Paul, has been as riveted to the 3 1/2-month trial as any of Enron's victims. She has logged on to the Internet daily to pore over the testimony of the 50 witnesses, none of it more infuriating to her than that of Lay and fellow former chief executive Jeffrey Skilling. "If both Lay and Skilling get off, I can tell you," she says of her late mother, "she will haunt them."
A Houston jury is expected to begin deliberating this week over whether the former head honchos at Enron committed criminal fraud by hiding corruption and losses at the onetime energy giant. But already, the genial, detached public persona through which Lay has maintained his innocence has eroded. That's key, since the trial is seen as one that will decide if professions of ignorance can shield corporate executives from responsibility.
Lay was testy even with his own lawyer and blasted the prosecutor for carving up the "corpse ... on the gurney." He stammered denials that he had attempted to influence testimony by contacting key adverse witnesses during the trial. In one case, he said he simply wished to "reconnect" with an old colleague, coincidentally--the prosecutor noted--just before his slated court appearance.
"Everything I know about the practice of law tells me Ken Lay will be convicted by his own testimony," says Houston trial expert David Berg. "He could have been as pleasant, affable, and avuncular as he always appears to be, but unfortunately, it was a microcosm of what the prosecutors were saying--that he was a micromanager with a very dark underbelly."
Risky move. Testifying in their own defense was a perilous course. "Like a lot of executives, [they] felt they have achieved so much success ... they get intoxicated by their own powers and persuasive abilities," says Christopher Bebel, a former prosecutor.
Some of the toughest questioning concerned stock sales by Lay and Skilling as the company entered its death spiral. Skilling maintained he sold his shares only because of the market chaos of 9/11, until prosecutors played an audiotape of him on the phone with his broker on Sept. 6, 2001. Lay explained his $70 million in stock sales in part by pointing to his "very expensive lifestyle ... that's difficult to turn on and off like a spigot." This galled former Enron senior administrative assistant Debbie Perrotta, who lost her savings in the debacle. "The rest of us--we had no choice," she says. "We had to go from the top to the bottom."
This story appears in the May 22, 2006 print edition of U.S. News & World Report.
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