Skilling rips into government's Enron 'rewrite'

HOUSTON - Former Enron Chief Executive Officer Jeffrey Skilling angrily ripped into government prosecutors at his criminal trial today, calling their case against him a deliberate effort to "rewrite history".

In his fourth day on the witness stand, Skilling appeared at times to be struggling to control his temper, but at other moments he grew sombre and expressed regret as he recounted Enron's dramatic 2001 decline into the then-largest ever US bankruptcy.

Skilling and former Enron CEO and Chairman Kenneth Lay are on trial on charges that they covered up the dismal financial health at the Houston energy company even as it spiralled downward.

Skilling grew agitated as his lawyer Daniel Petrocelli led him through a series of questions about the charges lodged by the US Department of Justice's Enron Task Force.

"I think they have purposely not looked at facts they should have looked at if they wanted to come to a more balanced and accurate conclusion," Skilling said.

Skilling said he was devastated by Enron's demise, but he reiterated his contention that the company was healthy when he resigned just four months before its bankruptcy filing that left thousand of people unemployed and wiped out billions of dollars in workers' pensions.

"I know there are a lot of people at Enron Corporation that will never recover from what happened," he continued.

"But I think there was a lot of damage done to people subsequent to that that was not a result of facts that really happened, but as a result of the rewriting of history to accomplish certain objectives that people have," he said.

Skilling, 52, faces 28 charges of conspiracy, fraud and insider trading, while Lay, 63, faces six counts of conspiracy and fraud. Both men face decades in prison if convicted.

Prosecutors will begin cross examination of Skilling on Monday.

The two former company chiefs have blamed Enron's downfall on a crisis of investor confidence that triggered a "run on the bank" after former Chief Financial Officer Andrew Fastow's off-balance-sheet partnerships were revealed.

Skimming

Fastow, who admitted to skimming tens of millions of dollars from Enron through the partnerships he operated, testified earlier in the trial that Skilling knew the deals were being used to hide Enron debt and inflate earnings.

Skilling said he still had about US$47 million (US$xx million) in municipal bonds and lived in a house he built in 2000 for US$4 million, but those assets had been frozen by the government. He also faces liability in civil lawsuits brought by irate Enron shareholders.

Much of his wealth came from his sale of Enron stock worth nearly US$63 million that prosecutors charged constituted insider trading. Skilling denied ever liquidating shares illegally.

His largest stock sale of 500,000 Enron shares came on September 17, 2001, about one month after he resigned from the company.

Skilling claimed not to recall placing an order that was never executed to sell 200,000 shares less than two weeks before that, and said he only wanted to reduce his Enron holdings because of market worries in the wake of the September 11, 2001 attacks on the United States.

Much of today's testimony centred on Enron's broadband internet unit, which prosecutors contend Skilling misrepresented to investors in order to boost the company's stock price.

Skilling countered that he believed that business was progressing well through April 2001, but that the telecoms sector collapsed in the following months, forcing Enron to begin laying off hundreds of employees in June and July.

"This was my failure. I made a mistake," Skilling said.

The defence team wrapped up its direct testimony by showing the jury a Bible verse about standing up against critics that an Enron board member sent to Skilling after the company had entered bankruptcy. Skilling said he was fighting to defend the company's tarnished reputation.

"Enron is now used as term for everything wrong. I think that's a disservice. I think that's wrong," he said.

Under Lay and Skilling, Enron rose from its modest roots as a Houston pipeline company to become a massive international energy player that was once the seventh-largest US company.

Its collapse was the first of series of corporate scandals that triggered stricter financial disclosure rules for companies.

- REUTERS