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The Honolulu Advertiser
Posted on: Tuesday, April 18, 2006

Cross-examination focuses on why ex-CEO sold stock

By Carrie Johnson
Washington Post

HOUSTON Telling former Enron Corp. chief executive Jeffrey Skilling that "the most important thing the jury has to rely on is your word," prosecutor Sean Berkowitz attacked Skilling's credibility in six hours of cross-examination designed to cast him as a liar who made use of selective memory.

Skilling, who developed a reputation for being intemperate during Enron's heyday, maintained his composure yesterday, although he sometimes talked over the prosecutor and suggested the jury see alternative documents. At one point Berkowitz interjected, "This'll probably work a little better if we do this the way I want to do it, Mr. Skilling, OK?" Later, he cautioned Skilling not to make "speeches."

The primary focus of the government's attack was not the maze of complex business partnerships for which Enron has become infamous but something far simpler: a $15 million stock sale by Skilling shortly after he left the Houston energy company. The sale occurred just three months before Enron filed for bankruptcy protection, costing thousands of employees their jobs and retirement savings. Skilling stands accused of 28 criminal charges, including insider-trading, fraud and conspiracy counts that could send him to prison for more than a decade if he is convicted.

Skilling previously testified that he did not recall a Sept. 6, 2001, attempt to sell 200,000 shares of Enron stock, what prosecutors call his single biggest trade at the time. The trade was aborted for technical reasons, but shortly thereafter Skilling took steps that would give him clearance to sell without notifying company insiders about the details. He ultimately sold 500,000 shares Sept. 17, 2001.

For the first time in the 12-week-old case, prosecutors played an audiotape of Skilling telling securities regulators in December 2001 that "there is no other reason other than Sept. 11 that I sold Enron," adding, "Oh, I agonized over it." Government lawyers reminded the jury yesterday about his Sept. 6 attempt and implied he used the terror attacks as a cover story to unload stock before the public became aware of Enron's mounting financial problems.

Berkowitz also highlighted what he called an unusual pattern of sales by the Skilling family in 2000. Skilling's former wife sold 225,000 shares in October 2000, reaping $14 million, and his then-girlfriend, Rebecca Carter, sold 21,000 Enron shares the following month, netting $1.65 million. Skilling said the sales were a coincidence.

In addition, prosecutors questioned Skilling about Enron's troubled international assets. They contend Skilling and former chairman Kenneth Lay failed to tell investors about more than $5 billion in losses in the international divisions.