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Enron trial begins
Two former chief executives of Enron Corp. went on trial on Monday - four years after the company's implosion made it the first in a wave of corporate scandals on Wall Street.
Last Modified: 31 Jan 2006 05:18 GMT
Enron case was the first of major corporate scandals
Two former chief executives of Enron Corp. went on trial on Monday - four years after the company's implosion made it the first in a wave of corporate scandals on Wall Street.

Lawyers selected the 12 jurors and four alternates who could decide the fate of Ken Lay and Jeffrey Skilling in a trial which will focus on the collapse of the Houston-based energy giant.

 

"The parties and the court have placed substantial confidence in your ability to reach a fair and impartial verdict in this case," Sim Lake, the US district judge told the jury, who will be hearing, on Tuesday, the opening statements in the long-awaited trial.

 

Lay and Skilling, who became symbols of corporate greed and executive privilege, get their day in court after Enron, once the seventh largest US company, collapsed in disgrace in a December 2001 scandal over accusations of shady financial dealings and lies to the press, federal regulators and investors.

   

The two have largely blamed a subordinate, Andrew Fastow, the former Enron Chief Financial Officer, and a panic-driven "run on the bank" for their company's ruin.

 

Overview of charges

 

Kenneth Lake:All we are hoping...
is to pick p a fair jury

"All we're hoping for today is to pick a fair jury that will give me a fair shake. The outcome will be fine," Lay told CNN as he walked into the downtown US courthouse for the start of jury selection in a trial expected to last four months.

   

Earlier in the day, Lake introduced Lay and Skilling to the 100 potential jurors gathered in a large courtroom, and gave them an overview of the charges that could send the two to jail for decades.

   

"This will be one of the most interesting and important cases ever tried," Lake told them.

 

"We are not looking for people who want to right a wrong or provide a remedy for those who suffered in the collapse of Enron.

 

We want 16 jurors who, although they do not relish being jurors in a four-month trial, nevertheless view jury service as a civic responsibility," he said.

   

The Enron bankruptcy was the first of a series of major corporate scandals that enveloped firms such as HealthSouth, WorldCom, Global Crossing and Adelphia and led to the passage of the 2002 Sarbanes-Oxley Act that toughened financial reporting and auditing requirements for publicly owned companies.

   

Combined, Lay and Skilling face more than three dozen fraud and conspiracy charges that accuse them of lying about the company's financial state.

   

Ties with Bush

 

Lay unsuccessfully tried to get help
from his friend, President Bush 

Lay at one time tried unsuccessfully to get help from the Bush administration counting on the close ties to President George Bush he developed as a major campaign contributor.

 

He and Bush were close enough that Bush nicknamed him "Kenny Boy"; but the president quickly distanced himself from his old friend and did nothing.

 

Fastow has pleaded guilty to two conspiracy counts and agreed to testify against his former bosses in exchange for a maximum 10-year prison sentence.

   

Enron's demise left thousands jobless and wiped out billions of dollars in workers' retirement accounts - a factor that defence lawyers complained tainted the jury pool.

 

So far, 16 people have struck plea deals with the US Department of Justice's Enron Task Force for activities at the company and five others, including four former Merrill Lynch employees, have been found guilty at trial.

   

One Enron accountant has been acquitted, and five other executives at its broadband unit got off without convictions in a trial last year, although they will be tried again this year because their jury could not reach a verdict on some charges.

   

Arthur Andersen, the accounting firm that audited Enron's books and saw its business ruined by its battered reputation, had its conviction for destroying documents overturned by the Supreme Court last year, and prosecutors subsequently dropped the case. 

Source:
Reuters
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