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Missed Connections: Gefilte Fish...and "Chain Connections"
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Rock Talk, Vol. IX
Former Enron CEO Jeff Skilling began testimony under cross-examination yesterday, quickly finding that prosecutor Sean Berkowitz wasn't going to give him much latitutde. Berkowitz seemed very well-versed in Skilling's deals at Enron, pressing the former executive on details of his deals and side deals and trying to unravel the defense's portrayal of Skilling as a regular ol' good guy who is unfairly burdened by false accusations.
An early hit to Skilling's credibility came when Berkowitz asked him about an investment in Photofete, an online photo sharing business run by Skilling's girlfriend with which Enron did some business. Skilling said Monday he invested $60,000 in Photofete and that Enron did between $30,000 and $50,000 in business with the company. That's far more than the $3,000 in business Skilling told SEC investigators Enron did with Photofete, but as Berkowitz pointed out, it's way less than the actual numbers — prosecutors Monday showed jurors canceled checks showing that Skilling actually invested $180,000 in the company and that Enron did $450,000 worth of work for Enron. That was 76 percent of Photofete's entire business. Berkowitz asked Skilling if he followed Enron's code of ethics by reporting the potential conflict of interest and Skilling replied, "It was a small investment. I don't really recall." Skilling also said he doesn't remember if he knew Enron was supplying the bulk of Photofete's business — apparently he and his girlfriend didn't talk much about her work.
Berkowitz also pressed Skilling about a Sept. 6, 2001, phone call in which Skilling asked his broker about selling 200,000 shares of Enron stock. Skilling ended up selling 500,000 shares on Sept. 17, and he told SEC investigators the sale was prompted solely by the Sept. 11 attacks and uncertainty over the stock market. "There was no other reason other than 9/11," he said during SEC testimony. Of course, Skilling now says he doesn't remember the Sept. 6 phone call, and he testified again Monday that there were no problems at Enron that would have prompted him to try to dump stock as the company slid toward collapse — especially not Sherron Watkins's memo to Key Lay warning of accounting scandals. "I had no knowledge of accounting (problems)," Skilling said yesterday.
Another line of questioning focused on the facr that, in the fall of 2000, Skilling, his ex-wife and his girlfriend sold millions of dollars' worth of Enron stock at the same time. Skilling said the sales, which took place when Enron stock prices were at an all-time high, were just a coincidence.
"It's a coincidence that the Skilling family was selling shares at this time — you, your ex-wife and the woman you were having a relationship with?" Berkowitz asked."Yes," Skilling replied.
He later joked that "I was talking to my brothers during the (morning trial) break, and they said, 'You didn't tell us to sell stock.'" Berkowitz cut him off, saying his brother is not on trial.
Note to Skilling: Don't try your "Mr. Bill" jokes on Berkowitz. We bet he wouldn't go for them.
(It's not covered in the Chronicle, but Houstonist enjoyed a story in NPR's report on the trial yesterday about a point where Skilling said one of his lawyers did not specialize in jury persuasion. Berkowitz immediately projected the attorney's website on the screen, showing that she is, indeed, a jury expert. Oops!)
Skilling is expected to be on the stand for at least a couple more days, followed by some character and fact witnesses and then ex-Enron Chairman Ken Lay, who could testify as soon as early as the end of next week.
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