Prosecutors and defense attorneys presented their opening arguments Tuesday in the trial of two former officials of the Enron corporation. The presentations provide a map for the several weeks of trial ahead.
Setting forth the government's case against former Enron Chairman Kenneth Lay and former Chief Executive Officer Jeffrey Skilling, Federal Prosecutor John Hueston told the jury that both men are liars. He said the government will provide evidence, in the form of audio and video recordings, documents and testimony, that shows how they carried out the fraud that bilked investors of billions of dollars.
To illustrate his point, Hueston played a recording in which Skilling spoke in a company meeting about the failure of Enron's broadband division. He then played a recording made a few days later in which Skilling painted a rosy picture of the division for investors.
The federal prosecutor also referred to statements made by Lay in which he told Enron employees that all was well in the company but, on that very same day, sold $4 million of his Enron stock.
Defense attorneys went right to the heart of the prosecution case, arguing that Lay and Skilling committed no crimes. They said that the collapse of Enron was caused by a market panic and not internal fraud. Skilling's attorney, Daniel Petrocelli said 13 of the 16 former Enron executives who have pleaded guilty to various crimes in deals with the government were not guilty of any crime. He said they had bowed to government pressure to take lesser sentences in return for testimony against higher-up figures, like Lay and Skilling.
When Enron collapsed in late 2001, thousands of employees in Houston and at other sites around the world lost their jobs and the retirement savings they had been urged to put into company stock. The fall of what was at one point the seventh-largest company in the United States hit Wall Street hard as well, bringing down the stocks of many other companies in related businesses. Enron stock went from a high of 90 dollars a share to 36 cents a share before the company went into bankruptcy.
In the federal indictments, Ken Lay faces seven counts of fraud and conspiracy; Jeff Skilling is charged with 31 counts. The government's first witness is expected to be Mark Koenig, the former head of Enron's Investor Relations Department who pleaded guilty to aiding and abetting securities fraud in 2004.