Enron Top Officials Found Guilty of Fraud and Conspiracy
[Sorry, the video for this story has expired, but you can still read the transcript below. ]
Bethany McLean of Fortune magazine has been covering the trial. She’s co-author of a book about the rise and fall of Enron, called “The Smartest Guys in the Room,” and she joins us now from Houston.
Bethany McLean, welcome.
BETHANY MCLEAN, Fortune Magazine: Hi, how are you?
JIM LEHRER: Fine. Take us inside the courtroom. What happened?
BETHANY MCLEAN: Well, there was pandemonium inside, with people trying to get into the courtroom before the verdict was announced. And everybody was on their feet, and the marshal had to yell to ask people to sit down.
And then everyone was seated, and there was silence as the jury — after the jury filed in. And as they began to read — as Judge Lake began to read the jury’s verdict, beginning with the guilty charge on the first count of conspiracy for Jeff Skilling, you could hear audience members, clearly family members, start to cry. And one of the jurors…
JIM LEHRER: What about Jeffrey Skilling? What was his reaction when he first heard the first “guilty”?
BETHANY MCLEAN: It was strange. I didn’t see him at the first “guilty,” but I looked over at him during the process of the “guilties,” and he actually had an odd grin on his face. And his lawyer, Dan Petrocelli, had his arm on Skilling’s back, rubbing his back, but it was almost an odd, bemused, confused kind of smile.
JIM LEHRER: All right. I interrupted you. You said then a juror did something? What?
BETHANY MCLEAN: The jury was clearly emotional about the verdict. This was not a jury that looked at Ken Lay and Jeff Skilling as cartoon characters, as caricatures of evil. They clearly saw two men and two men whose lives they held in their hands.
And, as they said later, it was a very emotional process for them, and you could see that as the verdict was announced. One juror had her head down in her hand, and she looked as if she was tearing up.
What was the court reaction?
JIM LEHRER: All right, now move us onto Ken Lay. When the judge read the verdict against Ken Lay, what was the reaction?
BETHANY MCLEAN: Well, Ken Lay was sitting not with his lawyers at the table where he sat during most of the four-month trial, but rather in the first row of the audience with his wife, Linda. And you heard -- Lay was not as emotional, but his wife broke down in tears.
JIM LEHRER: And who was in the courtroom besides -- did Skilling having family members in there along with the Lay family members?
BETHANY MCLEAN: Oddly enough, he didn't. The entire Lay family was there, as well as a number of other -- of Lay's other supporters, including Reverend Ed Young. Skilling was by himself, with the exception of his brother, Mark, who is a lawyer and has helped his trial team.
But I didn't see any of the rest of Skilling's family in the courtroom, and it could be that really none of us were expecting the verdict today, and it could simply be that people weren't reachable.
They hung together during the trial
JIM LEHRER: Was there a legitimate feeling of true surprise? Were these people really stunned that they were convicted, rather than acquitted, today?
BETHANY MCLEAN: I think, on some level, yes. I think the whole tale of Enron is, in many ways, a tale of self-delusion and of the power of rationalization. And I think, on some level, when Jeff Skilling and Ken Lay tell us that they're innocent, that's what they believe.
And I think, certainly in the years since Enron's bankruptcy, as they've faced public outrage, they've dug further into that view. And so, yes, I think, on some level, they are genuinely surprised.
JIM LEHRER: Sure. Did they maintain any kind of relationship during this, in the last four years since the collapse of their company and since they've been indicted in the trial? Are they still friends and associates in any stretch of any imagination?
BETHANY MCLEAN: Well, it's funny. No one ever thought Ken Lay and Jeff Skilling were friends. In fact, people thought during Enron's heyday that the two men didn't much care for each other, that Skilling viewed Lay as one of the people who didn't get it.
And Lay, when he came back and took over the company after Skilling abruptly departed clearly saw Skilling as the guy to blame for some of the decline in the company's morals, as he put it at an employee meeting.
What actually was astounding was how they hung together during this trial. People expected before the trial that there was a good chance that they would turn on each other and, more to the point, that Lay would turn on Skilling and try to blame Skilling for what had happened at Enron in order to extricate himself. And they didn't; they presented a very unified defense.
Jury clearly rejected defense
JIM LEHRER: Speaking of the defense, the jury clearly rejected their defense. And their defense essentially was that they had done nothing wrong. And the prosecution also in the closing argument said, not only did they lie about that, that they lied in their testimony, each testified.
Is that borne out by the jurors? Did they just simply not believe these two men?
BETHANY MCLEAN: It is. It's borne out by what the jury said. They did not find Jeff Skilling and Ken Lay in the end to be credible. And one of the really reassuring things to me about this, actually, was listening to the jury and listening to them talk about the process after the verdict had come in.
This was not a jury that mistakenly latched onto one piece of evidence and gave it undue weight. This was a jury who heard the evidence presented to them, listened very carefully, and made a decision that the case the prosecution presented all hung together, was corroborated by multiple witnesses and by documents. And, in the end, that's what they believed.
But it really is -- you know, it's interesting. People criticized the prosecution throughout the case for saying there was no smoking gun. Well, there never was a smoking gun at Enron, and the jury didn't look for a smoking gun, and didn't need one. They saw the combined weight of testimony, and that's how they voted.
Who was to blame for bad finances?
JIM LEHRER: And that's based on after -- you say after the verdict was returned and the defendants left the courthouse, the jurors then had a press availability of some kind?
BETHANY MCLEAN: They did. They all went in to do that.
JIM LEHRER: As a group? As a group?
BETHANY MCLEAN: Yes. They all went into a jury assembly room, and we in the press lobbed questions at them, and they answered.
JIM LEHRER: Yes. And, again, to oversimplify, the jury found that these two men led the company to its bad situation, and then lied about it, and, in effect, benefited themselves to the detriment of all others involved, is that it?
BETHANY MCLEAN: It is. I'm not sure that your first point is fair, that they found that Lay and Skilling led the company into a bad situation. They found more that Lay and Skilling lied to investors and employees about the shape that the company was in and, by selling stock, put their own interests ahead of their employees and shareholders.
Who was to blame for Enron's financial weakness and for its eventual bankruptcy? That was, frankly, a question the jury wasn't asked. Lay and Skilling were not charged with bankrupting Enron.
JIM LEHRER: Yes. OK, I got it. OK, thank you very much, Bethany.
BETHANY MCLEAN: Thank you, Jim.