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Monday, Nov 23, 2009
Hauled before the Senate, Congress' favorite Enron whipping boy rails against his persecutors, and defends Ken Lay.
Feb 27, 2002 | "Mr. Lay doesn't deserve prison rape," former Enron chief operating officer Jeff Skilling said Tuesday before the Senate Commerce subcommittee on consumer affairs, referring to his former boss, former Enron CEO Ken Lay.
No doubt some other ex-Enron employees, their life savings long gone, would disagree with Skilling. Or at least think Lay deserves dinner and a movie first. But the rather stunning remark exemplified the righteous indignation Skilling brought with him to the Senate Tuesday morning.
The strategy was at least somewhat effective. Since Skilling -- one of the few Enron executives without what Sen. Peter Fitzgerald, R-Ill., referred to as "the Fifth Amendment flu" -- last testified before Congress, many members of Congress have said that they suspect him of having committed perjury. Rep. Billy Tauzin, chairman of the House Energy & Commerce Committee, told CBS that Skilling seemed to think "that he could come and just, you know, flamboozle us, just tell us anything he wanted, and we would buy it. I'm afraid he may have put himself in some legal jeopardy as a result."
But throughout the five and a half hours of his second appearance, few senators seemed able to pin Skilling down on any examples of any clear lies, however unbelievable some of his claims may have been. Skilling aggressively, arrogantly, rebuffed their charges, occasionally turning the tables and questioning his inquisitors.
Likewise, the hearing, billed as a senatorial Thrilla in Manila, with Skilling confronting two of his company nemeses, Enron president Jeff McMahon and vice president Sherron Watkins, did not live up to hype. Both McMahon and Watkins have been lauded as whistleblowers for expressing concerns about the questionable partnership arrangements. "I wish there had been more Miss Watkinses and Mr. McMahons in the organization," effused Sen. Olympia Snow, R-Maine, though it's worth pointing out that neither complained of the alleged chicanery to anyone outside the company, such as an SEC official, or in any way tried to prevent thousands of Enron employees from losing their shirts.
Still, despite the compliments, McMahon and Watkins both seemed somewhat cowed in Skilling's presence. McMahon was lauded for his March 2000 meeting with Skilling in which he expressed his concerns about the questionable partnerships formed by Skilling's protégé, former chief financial officer Andrew Fastow, which created awkward conflicts of interest. Skilling, sitting only one lawyer away, continued to describe the meeting as one in which McMahon was mainly concerned about his compensation. McMahon didn't have much to say about that.
Watkins, who had called Skilling a "swindler" in her House testimony, found herself even occasionally agreeing with some of his assessments. The biggest embarrassment Watkins caused Skilling Tuesday may have been when they stood to be sworn in, and she towered over him.
Just as McMahon and Watkins brought legal counsel, Skilling sat at the hearing table with O'Melveny & Myers attorney Bruce Hiler, former associate director of enforcement at the Securities and Exchange Commission. Skilling's fiancée, Rebecca Carter, Enron's former corporate secretary, watched the hearings on TV from a separate Senate room.
Long before Skilling insisted that Lay didn't deserve the fate wished upon him by California Attorney General Bill Lockyer, who told the Wall Street Journal last May that he "would love to escort Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey,'" Skilling was true to his own peculiar form: a type A on Planet Nine.
He continued to insist that Enron was in sound shape when he left for "personal reasons" last August. The company collapsed not because it overstated its worth by approximately $1 billion due to the debt hidden in the shell partnerships set up by Fastow, Skilling insisted, but because investors and banks got nervous and there "was a classic run on the bank" like in the 1880s. The Harvard MBA who was able to riff endlessly on the difference between a low correlation and a "naked" hedge continued to plead ignorance of basic accounting.
