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His Story — And He's Sticking To It

Former Enron CEO Jeffrey Skilling talked to his jurors for the better part of the past two weeks, through an unusually long direct examination by his own attorney and a pointed and precise cross-examination by a tough prosecutor.

Skilling talked about Enron's roller-coaster history and about high finance and about the market and about how decisions were made inside the company before its colossal fall in 2001. He talked and he talked and he talked. Like a professor. Like a corporate cheerleader. Like a guy who once was worth $70 million or so. Like a guy who has a hard time acknowledging mistakes or failure. Like a guy who is going to go into shock if he goes to prison. And now the most important open question in his federal fraud and conspiracy trial is whether the men and women to whom Skilling was speaking, certainly no jury of his peers, believe what he had to say.

Last week, Skilling completed a thorough and effective under-oath chat with his attorney, Daniel Petrocelli. This week, over three intense days, he mostly held his own with government attorney Sean Berkowitz. Last week, an obviously brilliant man was able to brilliantly toggle back and forth between Petrocelli and jurors to offer his side of the story — that he knew of no fraud at Enron and that no one cooked books because the books didn't need to be cooked. And this week Skilling was able to parry the dogged Berkowitz, over and over again, without losing his temper much or otherwise coming off as a monster.

Men who rise to such power and prominence on their own merit rarely lose their touch overnight and clearly Skilling has kept his in this post-Enron world. That's why Petrocelli, the seasoned defense attorney, gave his client plenty of leash and allowed the smooth-talking salesman to explain what he says really happened at Enron. And it's why Berkowitz, the prosecutor, tried to bolster the government's case mainly by trying to tally hundreds of tiny points against Skilling without even shooting for the big score. Better not to try to swing for the fences, Berkowitz figures, than to swing and miss.

Now that Skilling has stopped talking, his jurors have a stark choice to make about his testimony. If they believe him, or even most of what he has said, they should be much more forgiving toward him and his co-defendant, former Enron chairman Kenneth Lay, during the deliberations that likely will begin at the beginning of May. If jurors take a stand with Skilling, they, like him, will see the Enron collapse, and the fraud that accompanied it, as something that went on deep below the surface of the company, at a level and with a structure that simply eluded even the sharp-sighted Skilling.

That's because there was very little give in the Skilling narrative; very little room for apologies or the acknowledgement of mistakes or poor judgment. He had an explanation for virtually every horrific business decision that Enron executives, himself included, made on their way into the corporate toilet; a defense and a rationale that he says justified the action at the time it was made. Sure, it all looks bad now, Skilling and his lawyer concede, but during the push-and-pull of Enron's frenetic corporate life they all were doing the best they could in an environment in which, as Skilling himself said, you shot first and asked questions later.

So he didn't lie to market analysts to prop up the stock price, as the government claims, he merely "spun" the figures the way a good marketer, a good promoter, has to do. He wasn't on the lookout for fraud with those off-the-book partnerships, he says, because Enron didn't need to engage in fraud to cover its losses — things were just swell bottom-line-wise. And he didn't push his subordinates to raise quarterly figures because, well, those figures were changing all the time anyway in the fluid world of corporate accounting. Oh, and by the way, Skilling told jurors over and over again, he either wasn't in the room when the bad stuff happened or the people who say he was are lying.

Berkowitz deserves credit for an effective, if not dramatic, cross-examination. Call it death by a thousand cuts. Berkowitz caught Skilling, perhaps, in a few tiny lies but never got him to offer up the big lie, the keystone to the government's case. The idea for prosecutors was to cut into Skilling's credibility along a broad front of issues, to bring him up repeatedly to the point of denial, in order to ultimately say to jurors, as prosecutors surely will during closing arguments, that Skilling surely cannot be the font of all knowledge, all accuracy, all integrity, and all credibility about what went on at Enron during those swirling last months of its existence.

Remember, if Skilling were as right about Enron as he maintained during seven long days of testimony the company should not have — could not have, perhaps — self-destructed the way it did. In that way, Enron's collapse, and the fraud that accompanied it, are material facts which even Skilling cannot deny. Jurors know it. The judge knows it. And the lawyers do, too. And that's probably another reason why Berkowitz went relatively easy, confrontation-wise, on Skilling. The prosecutor knew his witness is too clever to have gotten caught in too many traps; too wily to have conceded too many points. And he probably figured that jurors wouldn't be that impressed if he tried to bully the businessman.

Skilling did a good job of consistently and clearly communicating his perspective about the Enron story. And Berkowitz did a good job of eking out small concessions from a defendant whose whole professional life has been based upon the idea of selling daring ideas to skeptical people. It's impossible to tell now whether the case against Skilling was won or lost on his testimony. That's probably how it should be — and probably the way the principals figured it would go before Skilling took the stand.

By Andrew Cohen