The former Enron bosses Kenneth Lay and Jeffrey Skilling were on Thursday convicted on fraud charges stemming from one of the most infamous scandals in corporate history.
Jurors in the trial returned their verdict after just five days and two hours of deliberations, despite dozens of charges and often complex financial detail during the four-month trial. Both men now face the prospect of spending the rest of their lives in prison.
The convictions are a resounding victory for the United States government, which was under pressure to hold individuals to account for the collapse of what was once America’s seventh-largest company. Thousands of people lost jobs and life savings when Enron filed for bankruptcy in December 2001, the beginning of a turbulent period for corporate America as scandal followed scandal. It took more than four years for the Enron case to reach trial.
As he emerged from the court with his lawyer, Skilling looked pale with shock. Asked whether he would ever accept his guilt, he shrugged and answered no. ”We have fought the good fight,” he said. ”Some things work and some things don’t. Obviously I am disappointed but that is the way the system works.”
His lawyer, Daniel Petrocelli, added: ”Obviously the trial did not come out the way we had hoped. It certainly does not change our view of Mr Skilling’s innocence. It is obviously a very difficult time for Mr Skilling, his children and his family but we are going to stand behind him. We have just begun the fight.”
Skilling (52) was found guilty on 19 of the 28 counts against him of conspiracy, fraud, making false statements and insider trading. Lay (64) a former friend of United States President George Bush, was found guilty on all six charges that were filed against him of conspiracy and fraud.
Both men stood motionless as the verdicts were read out. Lay was also convicted of bank fraud and making false statements in a separate trial related to his personal banking. Lay had entered the court alone, without his wife Linda, for the first time during the trial. As he emerged from the lift he was heard to say: ”I hate to go into court without my wife — it’s as much her life as mine.”
Sentencing was set for September 11. Technically, Lay had been open to 165 years in prison and Skilling 275 years. But they are likely to be given jail terms of between 20 and 30 years. The two men are free on $5-million bail until the sentencing date.
The Enron bosses had been accused of a vast conspiracy to give the impression that the Houston-based energy company was in better financial shape than it actually was. The accounting tricks finally unravelled in late 2001. Investors fled in panic and the company was forced to file for bankruptcy.
The breakthrough for prosecutors came in early 2004 when they secured a guilty plea from the former Enron finance chief Andrew Fastow, who testified against his former bosses in return for a relatively short jail term of 10 years. He provided testimony during the trial that suggested both Lay and Skilling had encouraged him to commit fraud and lied to investors about the financial health of Enron. Both Lay and Skilling resolutely maintained their innocence and said Fastow was solely to blame.
The convictions provide a bookend for a period that Wall Street would rather forget. Allegations of fraud against some of the biggest names in US business rapidly followed at the likes of the telecoms firm WorldCom, the cable company Adelphia, the conglomerate Tyco and by the TV celebrity Martha Stewart.
The jury’s deliberations had been expected to take at least another week, although there had been speculation that, with the Memorial Day holiday weekend looming, the jury would want to be free sooner.
In suburban Houston, where many former Enron employees live, the news was only slowly sinking in. Werner Thurau said: ”I was surprised at the speed with which they reached their decision, but not surprised at the decision itself. I think it was fair on the evidence.” – Guardian Unlimited Ã‚