Enron Execs Launch Defense

Enron founder Ken Lay and his wife Linda are escorted by Houston Police as they leave the federal courthouse during a lunch break in his trial Tuesday, Jan. 31, 2006 in Houston.
Lawyers for former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling insisted Tuesday the men were guilty of no crimes, arguing the company was never infested with fraud and instead fell victim to a sudden crisis of market confidence.

Lay and Skilling were pioneers in the energy trading industry who deeply loved their company — which stands to this day, Lay lawyer Michael Ramsey said, 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 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," 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, Petrocelli said, "There's no evidence any books were cooked at Enron."

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

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

The government says Enron was a "ticking timebomb," $500 million in the hole and hiding losses from investors by swapping funds from one account to another, CBS News' Teri Okita reports.

Hueston, part of the U.S. Justice Department's Enron Task Force, said Lay and 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.

CBS News legal analyst Andrew Cohen writes that "as opening statements begin here, it's not hard to see where this trial is likely to head. Federal prosecutors know they have to make simple for jurors the enormously complex story of Enron's implosion."

"Stupid men don't get to run companies like Enron, prosecutors will argue, and anyone who ran Enron simply had to know how rotten it was to its core," Cohen said.

The dramatically different portrayals before a jury of eight women and four men kicked off what could be a four-month trial of Lay and 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.

Attorney Michael Ramsey described Lay as "bone-solid, churchbound all his life," and highlighted his millions of dollars in philanthropy. While Lay accepts responsibility for the bankruptcy of Enron, Ramsey said, "Failure is not a crime. Bankruptcy is not a crime. If it were, we would have to turn Oklahoma back into a penal colony."

Cohen writes that Ramsey sounds like old-school Texas, as down-home and folksy as Lay would like the world to think he is.

Later, noting Enron had boldly entered international markets and transformed its industry rather than losing market share like some American automakers, the defense lawyer asked: "Do you want a Chicken Little at the helm of a company like Enron?"