Skilling Grilled Again At Enron Trial

Former Enron Corp. CEO Jeffrey Skilling grew tense Tuesday when challenged about whether a significant portion of the energy company's assets and investments underperformed more than a year before Enron crashed in scandal in late 2001.

In his sixth day on the witness stand in his fraud and conspiracy trial, Skilling minimized the warnings that Enron's risk assessment and control group gave throughout 2000 about poor investments and assets.

Several prosecution witnesses have testified that Enron used fraudulent financial structures in 2000 to hide losses from assets and investments the energy company wanted off its books. Skilling and his co-defendant, Enron founder Kenneth Lay, say those structures were proper. Skilling testified last week that financial structures known as Raptors were used to lock in gains rather than hide losses.

When prosecutor Sean Berkowitz presented documents from the risk assessment group that informed top executives of poor assets and investments, the ex-CEO said the items listed were not a significant percentage of Enron's asset portfolio.

"Out of hundreds of investments Enron made, these are the ones being watched," Skilling said. He compared Berkowitz's evidence to baseball rankings where only the "mess-ups" of the worst two teams are highlighted, ignoring others with better performance.

"Let's talk not about baseball, Mr. Skilling, let's talk about Enron," Berkowitz said sternly.

"This is a misrepresentation," Skilling shot back, adding that the watch list shows Enron carefully monitored risky investments.

Skilling has portrayed himself as a defender of his company's honor, but in his first day of cross-examination on Monday, he acknowledged a private investment he made in an ex-girlfriend's company may have crossed the ethical line.

Although it was unrelated to the criminal charges facing the ex-CEO and Lay, Berkowitz noted that Skilling invested in an ex-girlfriend's photo-sharing company in 2000 and 2001 that did business with Enron. He said he didn't disclose his investment to Lay or Enron's board, even though it may have been a violation of the energy company's code of ethics.

"It may be. It didn't occur to me," Skilling said.

Skilling told jurors he invested $60,000 in the business. But Berkowitz presented canceled checks and a copy of a wire transfer that showed the ex-CEO invested three times that much.

"$180,000, is that correct?" Berkowitz asked.

"I guess so," Skilling said glumly.

Skilling also reiterated he had nothing to hide. He was matter-of-fact rather than openly combative, though Berkowitz at times cut him off Monday and Tuesday.

"Skilling is holding his own," says CBS News legal analyst Andrew Cohen. "But you wonder if he is going to suffer a death by a thousand cuts; by a thousand tiny, minor points prosecutors are trying to make about his tenure at Enron. About what he knew and when he knew it when it came to the fraud there. And the more detailed Skilling is with his responses, the more prosecutors create the image of him as a man in the know."

Prosecutors allege Skilling and Lay repeatedly lied to investors and employees about Enron's health, spouting false optimism that hid weak business ventures and using accounting tricks that hid debt and inflated profits.

The two defendants say no fraud occurred at Enron, and the company spiraled into bankruptcy proceedings in December 2001 because of bad publicity and lost market confidence.

Skilling is charged with 28 counts of fraud, conspiracy, insider trading and lying to auditors, while Lay faces six counts of fraud and conspiracy.

Other Skilling statements Berkowitz challenged Monday included the ex-CEO's insistence that his Enron stock sales that grossed $63 million in 2000 and 2001 were proper, and his assessment of the worth of Enron's hodgepodge of international assets when he abruptly resigned from the company in mid-August 2001.

Last week, Skilling told jurors he didn't remember telling his broker to sell 200,000 of his Enron shares less than a month after he resigned. That sale was held up, and Skilling ended by selling 500,000 Enron shares on Sept. 17, 2001, which was the first day the markets opened after the Sept. 11, 2001, terrorist attacks.

Prosecutors allege he ordered the Sept. 17 sale because he knew Enron was in financial trouble, not because of markets roiled by the attacks.

On Monday, Skilling acknowledged he had forgotten about trying to order the sale of 200,000 shares on Sept. 6 that year until he heard his voice on a tape recording of a call to his broker that day played for jurors.

"You just forgot about that original order, correct?" Berkowitz asked.

"That's correct, yes," Skilling replied.

Other insider-trading counts against him allege he knew turmoil loomed when he sold tens of millions of dollars in stock through most of 2000 even as the share price rose. Skilling said those sales were preprogrammed to diversify his holdings.