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Trial begins of Enron ex-CEOs

Two former chief executives of Enron Corp have gone on trial four years after the company's spectacular collapse made it the poster boy for a wave of corporate scandals on Wall Street.

Last Modified: 31 Jan 2006 00:25 GMT
Ex-CEO Lay has vowed to fight the charge he lied to investors

Two former chief executives of Enron Corp have gone on trial four years after the company's spectacular collapse made it the poster boy for a wave of corporate scandals on Wall Street.

Ken Lay and Jeffrey Skilling, who became symbols of corporate greed and executive privilege, have vowed to fight charges they lied to investors while enriching themselves as the Houston-based company spiralled toward bankruptcy in December 2001.

"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 on Monday as he walked into the downtown US courthouse in Houston, Texas, for the start of jury selection in a trial expected to last four months.

Sim Lake, the US district judge, introduced Lay, 63, and Skilling, 52, to 100 potential jurors gathered in a large courtroom, then gave them an overview of the charges that could send the two men to jail for decades.

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

Prospective jurors

"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," Lake said.

He called prospective jurors to the stand one by one to quiz them about the case in a process to select 12 jurors and four alternates. Lake planned to complete the task on Monday and hear opening arguments on Tuesday.

Lay and Skilling presided over Enron as it rose to become the seventh largest US company, then plummeted into bankruptcy.

Enron's demise lefts thousands
of Americans jobless

It was the first of several 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 falsely telling the financial world Enron was doing great while they sold millions of dollars of its stock.

Both have vigorously denied any wrongdoing and have spent millions of dollars mounting a defence that Lay on Sunday said he believes will be successful.

Skilling and Lay have insisted Enron was a good company done in by Wall Street panic after disclosures they used off-the-books deals directed by its chief financial officer, Andrew Fastow, to hide billions of dollars in debt and inflate profits.

Conspiracy counts

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.

Skilling (2nd from left) leaving
Houston court house on Monday

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. For many former Enron employees, anger towards Lay and Skilling still runs deep.

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.

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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