Four years after the collapse of Enron, Kenneth Lay and Jeffrey Skilling, the company’s two former chief executives, today appeared in a Houston courtroom to face more than 30 securities fraud and conspiracy charges.
If found guilty in Enron’s hometown, the pair could face long prison sentences for their alleged parts in one of the most damaging scandals to hit corporate America.
Mr Lay, who President George Bush knew as “Kenny Boy”, today entered the courthouse holding hands with his wife Linda and accompanied by his defence team. Mr Skilling followed a few moments later with his lawyer, Daniel Petrocelli.
A pool of more than 100 potential jurors reported this morning to the court building where 12 jurors and four alternates are to be chosen to hear the case.
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Enron’s demise left thousands jobless in Houston and wiped out billions of dollars invested in Enron shares in retirement accounts. Defence lawyers have complained that those events created a largely biased city where Enron executives were unlikely to receive a fair hearing.
Andrew Fastow, Enron’s former finance director, has pleaded guilty to two counts of fraud. He is expected to be the star witness in the trial of his former chairman and chief executive.
However, the two defendants have consistently denied any wrongdoing.
“We’re ready. Bring it on,” Mr Skilling, 52, said in an interview last week with the Fort Worth Star-Telegram.
“I have absolutely no question that what we did at Enron was correct. I have absolutely no question that we are innocent of any criminal wrongdoing. I’ll stand by that. I’ll make that fight.”
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Mr Lay, 63, who founded Enron and served as chairman - and as chief executive, except for a short time when Mr Skilling occupied the job - has published a website proclaiming his innocence.
The trial will be a major test for the US Justice Department task force set up after the financial scandals that hit Enron and WorldCom. Mr Lay and Mr Skilling are reportedly spending more than $20 million on their joint defence.
“This is the championship game,” Jacob Frenkel, a former government prosecutor who has worked in enforcement with the Securities and Exchange Commission, told AFP.
Enron’s fall from grace was unparalleled, even in the context of the often violent ebb and flow of Wall Street. Fortune magazine had named the energy giant “America’s Most Innovative Company” for six consecutive years when it emerged that the company had been built on a series of massive accounting black holes.
The event also prompted the end of Arthur Anderson, the then big-five accountancy firm.
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Enron had employed more than 20,000 people and claimed revenues of more than $100 billion in 2000. In 2001 its shares collapsed from $90 to just 30 cents. Thousands of employees lost millions of dollars through the stocks’ decimation.
The trial is expected to last several months.