Former Enron CEO Jeffrey Skilling gave the sales pitch of his life Monday in front of his judge and jury here in federal court in Houston. Facing scores of years in prison on conspiracy and corporate fraud charges, Skilling was articulate, compelling, composed and persuasive under friendly questioning by his own attorney. It's no wonder he was heralded for so long by so many in the corporate community as the best and brightest innovator and salesman of his generation.
But, ultimately, the start of his testimony on direct examination, under the gentle guidance of defense attorney Daniel Petrocelli, made you think of the famous line about the assassination of President Abraham Lincoln: Aside from that, Ms. Lincoln, how was the play? Prosecutors no doubt stipulate to Skilling's former brilliance in the world of business. That's not in dispute; it's not what this trial is about. It's about whether the mastermind of so much success at Enron caused or allowed the biggest corporate failure in American history.
It is that dissonance — how Skilling's mastery eventually could result in such widespread destruction at and to Enron — that jurors will have to struggle with as the biggest white-collar criminal trial of its time lumbers into its third month. There is something inherently in conflict between the impressive appearance Skilling offered in court and the low charges against him. Will jurors look at the defendant now that he has performed for them and say, "So what? Look at what happened on the guy's watch?" Or will jurors look at him and say, "There is no way a guy that sharp, that loyal, and in such obvious command, ever would have allowed the company he essentially created to implode, fraud or no fraud."
After such a virtuoso performance, there may even be a juror or two who drinks the defense's Kool-Aid in a single gulp and who may now believe, as Skilling says he does, that Enron was fiscally sound just before it died and that the government is trying to criminalize just plain bad luck. Of all the chords struck Monday in court that one surely rang the harshest. Skilling's company was infested with greedy managers, festooned with sharpies and frauds, littered with feckless accountants and lawyers and egged on by sycophantic financial advisers — a company literally rotting from the inside. And Skilling sat there under oath and calmly told jurors that he was shocked when the walls came tumbling down.
At times Monday, the Enron trial seemed like a business school classroom with Skilling as the guest lecturer. When Petrocelli asked Skilling to educate jurors about his pre-Enron career, or about the history of Enron, Skilling would turn, expert-witness-like, to face jurors before offering his answer. He oozed charm, earnestness, and the ability to explain complex corporate terms, and if you forgot for a moment the financial catastrophe that Sklling oversaw, you could easily see how the defendant could have made so many deals and so much money riding the Enron wave to its crest.
At times Monday, the Enron trial seemed like a giant therapy session. There was Skilling, the ruthless corporate executive, using the language of victimization to describe the impact that the collapse of Enron had on his own life. As the company teetered, he told jurors "all I was doing at that time was going to pieces." He told the panel that he started drinking, and became depressed, and "did not really recover" for quite some time afterward. When he saw television images of Enron employees packing their boxes and leaving the building, Skilling told jurors, he "felt awful … it was very painful… You wanted to die."
There was Skilling, the Harvard Business School graduate, telling jurors that when the company began to collapse he "didn't realize what could happen" to him legally, and financially. "I didn't think I needed a lawyer," said the man whose Enron spent millions of dollars in legal fees. And when it finally dawned on Skilling that his old buddy, former Enron CFO Andrew Fastow, had committed corporate fraud it made him "almost physically sick." Unfortunately for Skilling, and for all those poor employees and shareholders, Skilling made his discovery about six or seven years too late.
There was Skilling, calling Enron's collapse "a run on the bank," who overruled his own attorneys to testify under oath a few years ago during a governmental investigation into Enron's fall. Part of his duty to the company, he told jurors; proof of his desire to take responsibility for what happened. A willing martyr for the cause. Skilling as victim. Skilling as hero. Skilling as a modern-day Joan of Arc. At times Monday, the Enron trial seemed like a bad Hollywood screenplay. He and other Enron leaders were victims of a "witchhunt," Skilling told jurors, an "irrational" search for someone to blame after the company went south.
The problem for Skilling is that the company's demise speaks for itself. He spent a great deal of time Monday explaining to jurors why Enron was in solid financial shape during his long tenure there. He justified many of the daring corporate decisions the company made; decisions which long ago have been questioned, even ridiculed, by experts who don't have a dog in this fight. If you didn't know the company filed for bankruptcy four and half years ago, and has since been revealed to be mess, you would swear at times that Skilling in describing Enron was talking about a solvent, successful Fortune 500 company. But he's not. And no amount of salesmanship can change that.
In Skilling's view, the company was done in not by gross malfeasance but by some cosmic bad luck. You prepare and you take risk and then "you hope you are not hit by a comet," is how Skilling described a business philosophy he implemented at Enron. But what happens when the "comet" is your own criminally-liable CFO and scores of other complicit Enron officials? And what happens when the comet is aimed at you for years, naked to the visible eye if only you are willing to look in that direction? And what happens when the market sees the comet before you do even though it is your responsibility to see it first?
No doubt Monday's testimony marks the high-water mark for the Skilling defense. Petrocelli's client will never again appear as decent and as credible as he did under direct examination. The defense theme that Skilling was a loyal Enron soldier who was unaware of any fraud will never again seem as viable. As a witness, Skilling showed many of the mesmerizing traits that allowed him to stand apart in the corporate world. But the story doesn't end happily here. It goes on. Just like the story of Enron didn't end in glory as the 20th Century came to a close. Just as Skilling's "comet" inevitably veered toward Enron, the government's comet now is aimed directly toward Skilling.
When prosecutors get their crack at the defendant, perhaps as early as Tuesday, they will ask him variations of a single theme. How could a guy so smart be surrounded by such stupidity; how could a guy so proud of his company allow it to be used for such ill purpose? How could a brilliant corporate mind say under oath in 2006 that Enron was in good shape at the end of the last century? It's going to take the sales job of all time to answer all of those questions to the satisfaction of the jury. Skilling's game — but the product he is selling isn't exactly top-shelf anymore.
By Andrew Cohen