The fraud and conspiracy trial of Ken Lay and Jeffery Skilling resumes this morning with former Chief Financial Officer Andrew Fastow back on the witness stand. Skilling’s lawyer ended his cross-examination Thursday afternoon. Mike Ramsey, Ken Lay’s attorney, is expected to question Fastow for only a few hours this morning. Houston Public Radio’s Rod Rice reviews the sixth week of the trial with Houston Chronicle Business columnist Loren Steffy.
The federal courtroom and the overflow room were packed with people last week eager to hear Fastow’s testimony. Steffy says Fastow turned out to be very credible witness with the most inside look, so far, at how Enron worked.
“Fastow is one of the four guys at the top and what he was able to do was basically put the jury inside the executive suite at Enron and give a very clear picture of how things operated there.”
The problem for the government is that while Fastow described Enron’s as a place with verbal agreements and unspoken understandings, there is no paper trial, no physical evidence for much of what he said. Fastow is an admitted thief and liar, but Steffy thinks, in a way that works for the government because after all the thief and the liar was the guy Enron made its CFO.
“The defense spent a lot of time trying to attack his credibility, trying to argue that a lot of these deals were legitimate, but I’m not sure that it really worked, I think that it was a tough case to make.”
Steffy says the picture Fastow painted of how many of the questionable deals were fashioned inside Enron is not a picture of how business really works.
“You can’t have a sale, you can’t have money changing hands in the business world where there’s not some risk involved. That was the problem, that was the reason these deals were shams because it’s not a sale if there’s no transfer of risk. And that is essentially what Enron had created, was this whole network of ways to get around that risk, so no, that was not normal. When you hear the defense argument that lots of businesses do this–they don’t do it like this…if they did we’d have serious problems.”
Fastow was known to be not well liked. He had a temper and could be arrogant, the defense may have been trying to show that Andrew Fastow to the jury but Steffy says by-in-large that did not happen. Steffy says after breaks or at the start of the day as everyone waited for the judge and jury to enter the courtroom he observed Fastow seeming to be meditating or praying.
” He would kind of lower his head, maybe look down at his lap. Some times his eyes were open and sometimes closed, but he seemed to be almost preparing himself, as he were telling himself not to lose his temper.”
Fastow did lose his composure when he talked about involving his wife and how she really didn’t do anything wrong despite pleading guilty and going to jail for tax evasion. Steffy says that could hurt the government’s case.
“That’s not an idea the prosecution wants the jury thinking about because you have 16 people in this case who are their star witnesses who have all pled guilty. The defense, obviously, wants jurors to believe that people plead guilty to things they didn’t do all the time.”
Jeffery Skillings name came up last week many more times than did Ken Lay’s. The testimony concerning the two, says Steffy, was mostly about things Skilling did and things Lay should have done–acts of commission and acts of omission.
“The way the prosecution seems to be taking this case is by making a strong case against Skilling, if you get the jury to think Skilling is guilty it’s much easier for them to then think Lay is guilty also.”