Guilty Pleasure
When the Enron verdict came down, a collective giddiness swept over Houston—much of it, anyway. Can we move on now?
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The courtroom itself was a far more sobering scene. Lay was almost always gray and stiff, while the young cadre of prosecutors had the ruthless, focused miens of contract killers—the kind of people Lay or Skilling might have recruited in happier times. Skilling’s swaggering, sharp- tongued attorney Daniel Petrocelli provided the only comic relief, though his loyalty to his client—the two were so close that people began making Brokeback Mountain jokes—was a constant reminder of what was at stake. (He, not the Houston police officers and their sable-hued mounts, often seemed to be Skilling’s real bodyguard during the crushing morning and afternoon forays to and from the courthouse.)
On the right side, behind the defense table, sat various members of the prosecution team, including FBI agents, while on the left, behind the prosecution table and closer to the jury, sat members of Lay’s and Skilling’s families. Lay’s loyalists often included a cluster of blondes—his wife, his publicist—who sat on Tush Cushes placed there by an assistant before their arrival. Behind them sat the press: representatives of the Times (columnist Joe Nocera came only once, for Skilling’s testimony, as did Kurt Eichenwald, the author of Conspiracy of Fools, who declared of Skilling, “He’s toast,” and exited after only a few hours); Fortune’s Peter Elkind and Bethany McLean, the authors of The Smartest Guys in the Room (the latter, with her Botticelli face and an assortment of glamorous heels, inevitably left a trail of poleaxed men in her wake); and John Emshwiller, of the Journal, who, with Rebecca Smith, wrote 24 Days. The Chronicle—which missed the story in the early years, when its management was more dazzled by Enron—was there in force, led by the indomitable, flame-haired Mary Flood, who brought her own plaid cushion, and Loren Steffy, whose acrid anti-defense blog became required reading for everyone involved.
Some days, I also caught sight of Carrin Patman, the wife of former Enron general counsel Jim Derrick, looking as lonely and anxious as a child. Other times I’d spy Linwood Olson, whose husband, John, now a successful hedge fund manager, was the analyst driven out of Merrill Lynch years ago by Lay because he raised questions about the company. The cool, blond Linwood had almost perfect attendance, causing Lay to remark that she “knew more about this trial than anybody.” Maybe Lay should have recalled Stephen Vincent Benet’s instruction to “make war on the men. The women have too long memories.”
For most of the trial, it was virtually impossible to tell how things were going. The prosecution would score a few points off the “Skilling ordered me to fudge the numbers” backboard or the “Lay knew the stock was tanking but pumped it up anyway” jump shot. The defense just as often came back with claims that the prosecution’s witnesses had made deals to save their own skins, but the jury was united enough in its understanding of Enron to prevent Petrocelli from making much headway when he tried to impeach the CEO of Enron Energy Services, for instance, for being ambitious.
Andy Fastow—like Garbo, he didn’t talk until he had to—was bracing in his honesty. In 2003 he had issued a firm and forthright “not guilty” plea to the court when he was indicted; three years later, thinner, grayer, and tearier, his sibilance betraying his nervousness, he now robotically recited phrases like “I pled guilty because I am guilty, and I thought that decision would be in the best interest of my family.” He also introduced the jury to some wonderful locutions—the “bear hug” he supposedly received from Skilling that guaranteed his side deals would never lose money and the phrase “open the kimono,” a slightly sexual term for business transparency. Recapitulating the transactions that made him famous—“I was just trying to cheat my limited partners,” he said, when quizzed about the questionable value of a particular deal—he was that rarest of beings: an honest crook.
You had to wonder how Skilling felt, watching the march of betrayers—men he’d mentored and made very rich—testifying against him, but he was seen to call only one of them “an asshole” outside of court, and that was in a whisper. Mostly, he held his own on the stand, splitting about a zillion hairs and rarely answering a question directly. Yes, he lost his temper when the prosecutors tried to elicit conflict-of-interest testimony about his and Enron’s investment in the photography business of his then girlfriend—the absence in the courtroom the next day of the woman he subsequently married, Rebecca Carter, suggested Skilling hadn’t told her about the fling—but the more important howlers were about Skilling’s passion for Enron’s foreign assets. If you were employed at Enron, or you studied the company, you knew he spent an enormous amount of time plotting to bury alive his interoffice competitor Rebecca Mark and her foreign businesses. (Still, he got sympathy votes from the peanut gallery when it was learned that his attorney intended to call his barkeep as a character witness. Cooler heads later prevailed, and Steve Zimmerman, owner of Zimm’s, did not appear.)
But it was Lay’s testimony, just weeks before the verdict, that turned the trial in the prosecution’s favor. The man who was previously a master of PR seemed incapable of donning his familiar, friendly game face during the most crucial contest of his life. He was, instead, downright dyspeptic, bickering not just with the defense but with his own attorneys. He embodied the imperial CEO, asserting, for instance, that he sold Enron stock only as a last resort. Alas, prosecutor John Hueston showed that Lay sold millions of dollars in company stock to meet margin calls amounting to only hundreds of thousands of dollars. Hueston further showed that Lay could have liquidated other funds or sold real estate to cover those calls—or, like ordinary people, he could have cut his lavish spending to reduce the amount of Enron stock he was “forced” to sell. After Lay complained that his expensive lifestyle “was difficult to turn on and off like a spigot,” Hueston countered that while the company was sinking into serious trouble, Lay shelled out $20,000 for antiques in Majorca (“It could be my wife found something she liked”) and spent $4,700 for two nights in France and $32,000 to reserve six nights in Deer Valley, Utah, for a ski vacation the following year.
It was in the evenings, after days of testy exchanges and damning financial revelations, that it dawned on various Houstonians that the conventional wisdom—Skilling would go to prison but Lay would skate—might be all wrong. Indeed, you could sense a different outcome in the desperation of Lay’s defense team during closing arguments, when a dispirited Mike Ramsey told the jury that a vote of “not guilty” did not necessarily mean “innocent” but instead “not proven,” and his high-strung colleague Chip Lewis—looking for one rogue juror—tried to play the carpetbagger card. “Don’t come to Houston, Texas, and lie to us,” he screeched at the prosecutors, oblivious to the fact that a great many people in Houston, inside and outside the courtroom, believed the real liars were at the defense table.
THE MONDAY MORNING quarterbacking began the Friday after the verdict was handed down. Some lawyers believed the case was decided when Judge Lake allowed the prosecutors to pursue a “willful blindness” charge, alleging that Skilling and Lay knew about but chose to ignore wrongdoing within the company. Others believed the defense lost when they abandoned their earlier stance of hiding behind the skirts of the lawyers and accountants (i.e., Vinson and Elkins and Arthur Andersen signed off on all of Enron’s moves, so they had to be okay). “Their case was doomed when they locked themselves in the position that it was a good company that failed because of bad publicity, short sellers, and Andy Fastow,” lawyer Philip Hilder told me. “Lay should have admitted he was an idiot?” I asked. “Yes,” he said.
A few days before the verdict was announced, I met Sherron Watkins for lunch, and I was struck by how much she reminded me of some of the no-nonsense women—eight of them in all—on the jury. Like Watkins, many of those chosen to serve were of a certain age, and though they displayed a terrific compassion toward the defendants, they had lived long enough to know when they were being played. But there was something else: On the whole, the ordinariness of these people was striking. No one was dressed to the nines or looked as if she cared about hobnobbing with world leaders or blowing the minds of Fortune 500 executives. They just wanted to do a good job and had the right to hope for as much from people far richer and more powerful than they. To paraphrase Carl Jung, what we deny will come back to us as fate; Lay and Skilling were so frightened of being ordinary men that they drove themselves headlong toward destruction, and they took a lot of well-intentioned people with them. If that wasn’t really illegal, well, they got their just desserts in the form of global humiliation, their personal bankruptcies—spiritual if not yet literal—on display for all to see.
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