In his seventh day testifying in his fraud and conspiracy trial, and third on cross-examination, Skilling insisted that neither he nor other top executives knew that Enron's retail energy unit had losses when management decided to move its trading function into the company's larger wholesale division in the first quarter of 2001.
David Delainey, former chief executive of the retail unit, Enron Energy Services, testified earlier for the government that the move hid $200 million in losses. He said he acquiesced to it under pressure from Skilling.
Skilling said the retail unit likely would not have reported losses had it remained separate from Enron Wholesale Services, which encompassed the company's larger, profitable energy trading franchise.
After the move, the wholesale division established a $240 million reserve intended to cover retail losses. Skilling said the reserve was established as a conservative measure in case losses came up, not because losses were already there for wholesale to absorb and hide from investors.
"You have assigned a motive to me, which is I was worried we would show big losses in EES," Skilling told prosecutor Sean Berkowitz in a matter-of-fact tone.
Berkowitz pressed Skilling about why a reserve was needed if no losses existed to hide.
"It was my state of mind at the time that EES was more likely to show a profit than a loss. That is my testimony," Skilling said.
Prosecutors allege Skilling and his co-defendant, Enron founder Kenneth Lay, repeatedly lied to investors and employees about Enron's health, using false optimism to hide weak business ventures and accounting tricks to obscure debt and inflated profits.
The two defendants say no fraud occurred at Enron, and contend that the company spiraled into bankruptcy protection in December 2001 because of bad publicity and lost market confidence.
Skilling's demeanor has been combative at times, and Berkowitz admonished him early Wednesday for trying to give lengthy answers when a "yes" or "no" would suffice.
"I really want to get through this today," Berkowitz said.
"I do too," Skilling replied.
Lay, who wants to begin testifying next week, on Tuesday gave Skilling's testimony so far a good review.
"I think Mr. Skilling did a great job today," Lay said. "He may have had a few trick questions, as he said, but I think he did a fine job on all of it."
So far, CBS News legal analyst Andrew Cohen points out, "Skilling is holding his own. But you wonder if he is going to suffer a death by a thousand cuts; by a thousand tiny, minor points prosecutors are trying to make about his tenure at Enron. About what he knew and when he knew it when it came to the fraud there. And the more detailed Skilling is with his responses, the more prosecutors create the image of him as a man in the know."
On Tuesday, about whether a significant portion of the energy company's assets and investments underperformed more than a year before Enron crashed.
Prosecutors allege Skilling minimized the warnings that Enron's risk assessment and control group gave throughout 2000 about poor investments and assets.
Skilling, a plain-spoken ex-executive Lay embraced to lead Enron's transformation from a staid pipeline company to an energy powerhouse throughout the 1990s, held his temper for the most part.
But he occasionally answered with sarcasm or tried to give lengthy explanations, only to have Berkowitz demand a "yes," "no" or otherwise concise statement, to which the ex-CEO would say, "OK."
In one instance, Berkowitz pointed out a script for an April 2001 conference call Skilling conducted to discuss that year's first-quarter earnings. Enron's investor relations department produced such scripts for Skilling to read.
But when he read it, he skipped a portion that said Enron's broadband unit, which Skilling had highly promoted to Wall Street expected a 2001 loss of up to $100 million rather than the $65 million the ex-CEO had forecast in January that year. Prosecutors say he knew the broadband unit was flailing when he touted it, which Skilling denies.
Berkowitz asked if Skilling could choose to leave something out of a script.
"Something tells me that's a trick question, but go ahead," Skilling said.
Berkowitz asked if Skilling would answer every question, "even the trick ones, yes?" Berkowitz asked.
"Yes," the ex-CEO said. He then said, "Sometimes I would add and subtract words form the script."
Skilling is charged with 28 counts of fraud, conspiracy, insider trading and lying to auditors, while Lay faces six counts of fraud and conspiracy.