Skilling Says He's 'Absolutely Innocent' on Stand

HOUSTON – Former Enron Chief Executive Jeffrey Skilling took the witness stand in his own defense on Monday, proclaiming his innocence and vowing he would fight criminal charges against him "till the day I die."

Skilling, 52, and former Enron CEO and Chairman Ken Lay stand accused of lying to investors and analysts to hide the dismal financial health of Enron, which collapsed in December 2001 in the then largest-ever U.S. bankruptcy.

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"It's not in my nature not to fight something like this. The charges against me are wrong," a visibly nervous Skilling testified. "I will fight those charges till the day I die."

Legal experts have said Skilling's testimony at the trial will be a crucial factor in whether he is convicted of the 28 counts of conspiracy, fraud and insider trading the prosecutors have lodged against him.

Under questioning from his lawyer, Dan Petrocelli, Skilling talked about his love for the company he helped build from a sleepy Houston pipeline company into an international trading giant and his decision to resign as chief executive less than six months after taking up the post.

"I was exhausted ... my head just wasn't in it anymore," he said.

Lay, Skilling's co-defendant in the case, returned to the CEO position he previously held for 15 years after Skilling's departure. He is expected to testify later in the trial, in which he faces six charges of conspiracy and fraud.

Both men have pleaded not guilty and face decades in prison if convicted at the trial that began at the end of January.

Enron's demise was the first in a wave of corporate scandals that shook the financial world and eventually prompted stricter disclosure rules for companies.

Petrocelli asked Skilling whether at the time of his August 2001 departure, less than four months before the company would tumble into bankruptcy, he believed Enron would collapse.

"Not in my wildest dreams. It's almost inconceivable now that it happened," he said.

A $1 billion charge Enron announced in October 2001 did not trouble him, Skilling said, since he believed the company was using his departure "to clean things up."

But a negative story in the Wall Street Journal the following day and several subsequent articles highlighting the dubious deals Enron had undertaken with partnerships operated by former Chief Financial Officer Andrew Fastow put pressure on Enron's already weak stock.

"I believed strongly the transactions were appropriate and proper," Skilling said.

Skilling and Lay have both blamed Enron's demise on a "run on the bank" caused by the revelations of Fastow's deals.

Fastow, who struck a cooperation agreement with prosecutors and will serve a 10-year prison sentence, testified earlier in the trial that the deals with his LJM partnerships were designed to hide billions of dollars in losses at Enron while inflating its earnings.

Fastow also said he had a secret deal with Enron's former chief accounting officer that was backed by Skilling to guarantee he would not lose money on those transactions.

Skilling grew more comfortable as his nearly day-long testimony proceeded, often addressing the jury directly and gesturing with his hands as Petrocelli led him through his background and explanations of Enron operations and business models.

Skilling said he even proposed putting up $70 million of his own money -- 80 percent to 90 percent of his net worth -- in a pool with other investors to launch a bid for Enron and save the company just weeks before it sought bankruptcy. But that deal never took off, he said.

Skilling said he thought his resignation contributed to the spiral that sent the company toward bankruptcy after he left.

"I will regret always that I left when I left," he said.

Skilling grew somber as he described watching from the outside as the company collapsed and called Lay seeking to return to the company, although he was rebuffed.

When Enron announced it would draw down credit lines of about $3 billion in October 2001, he knew the problems were serious.

"This was the first indication that there was a liquidity problem at the company, to me," he said.