- The Washington Times - Tuesday, January 31, 2006

HOUSTON (AP) — Attorneys for former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling insisted yesterday the men were guilty of no crimes, arguing the company was never rife with fraud and instead fell victim to a sudden crisis of market confidence.

Mr. Lay and Mr. Skilling were pioneers in the energy-trading industry who deeply loved their company — which stands to this day, said Mr. Lay’s attorney, Michael Ramsey, as “one of the finest free-market institutions the world has ever seen.”

A federal prosecutor laid out a starkly different version of events, telling jurors in opening statements in the men’s trial that they had lied to Wall Street and their own employees to cover up the crumbling finances that drove what was once the nation’s seventh-largest company into bankruptcy protection in December 2001.

Daniel Petrocelli, arguing for Mr. Skilling, went so far as to suggest 13 of the 16 Enron executives who have pleaded guilty to federal crimes were innocent, but caved in to intense pressure from zealous federal prosecutors.

“This is not a case of hear-no-evil, see-no-evil,” Mr. Petrocelli said, at times animatedly jabbing his finger at the jury. “This is a case of, there was no evil.”

Directly countering four years of negative publicity that turned the very name Enron into a symbol of accounting chicanery, Mr. Petrocelli said, “There’s no evidence any books were cooked at Enron.”

But federal prosecutor John Hueston said Mr. Skilling and Mr. Lay sold Enron stock before a massive fraud was exposed.

“This is a simple case,” Mr. Hueston told jurors, pacing slowly before the jury. “It is not about accounting. It is about lies and choices.”

Mr. Hueston, part of the U.S. Justice Department’s Enron Task Force, said Mr. Lay and Mr. Skilling sold Wall Street, auditors and their own workers a story of a “simply magical ability” for Enron to record consistently impressive growth.

“But inside the doors of Enron, something was terribly wrong,” he said.

The dramatically different portrayals before a jury of eight women and four men kicked off what could be a four-month trial of Mr. Lay and Mr. Skilling, who are accused of fraud and conspiracy and could face prison for the rest of their lives if convicted.

The Enron trial is perhaps the most closely watched of the corporate-fraud cases that followed the implosion of the Houston energy-trading giant more than four years ago.

Both defense lawyers suggested the company was the victim of market panic in 2001, and Mr. Petrocelli said Enron behaved like Nasdaq stocks that tanked when the dot-com bubble burst. He called Enron’s bankruptcy a tragedy and said the company “was the victim of an immediate, unexpected and temporary drain on its liquidity.”

Mr. Ramsey said market trust in Enron was eroded in the bear market of late 2001, and he blamed former Enron finance chief Andrew Fastow for stealing from the company.

When Mr. Skilling resigned as Enron chief executive officer in August 2001, turning the reins over to Mr. Lay, “He left a sound, vibrant and wonderful company,” the defense lawyer said. Mr. Lay had been CEO and chairman of the company from 1986 until his resignation in January 2002, except for the six months when Mr. Skilling was CEO.

Mr. Petrocelli blamed three men — Fastow, former Fastow aide Michael Kopper and former Treasurer Ben Glisan Jr. — for stealing from Enron. All three have pleaded guilty to federal crimes.

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