Once a know-it-all, Skilling now knows nothing

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© St. Petersburg Times
published February 8, 2002

If I had to cast Enron Corp. ex-CEO Jeff Skilling as leading man in a movie, it would be a tough choice among these four:

A: Dude, Where's My Asset?

B: Clueless.

C: Honey, I Shrunk the 401(k) Plan.

D: Liar Liar.

After watching Skilling willingly testify Thursday afternoon before a skeptical congressional subcommittee, I just can't decide.

Did the one-time hot shot Enron chief employ the classic Sergeant Schultz defense ("I see nothing!")? Or did Skilling opt for the trendy "deny-deny" defense perfected by former President Clinton ("I did not have sexual relations with that woman, Miss Lewinsky.")?

Let's give Skilling some credit for showing up at all and choosing to respond to (if not really answer) some tough questions. Earlier Thursday, four other Enron executives waltzed into the House Energy and Commerce subcommittee, quickly took the Fifth and declined all questions, then waltzed out.

Then again, after the first dozen, I lost count of how many times Skilling answered questions with I don't recall. Hey, this is a guy who graduated near the top of his class at Harvard Business School. I bet he didn't use I don't recall with his MBA professors.

Still, a few interesting, and distressing, tidbits about Skilling and Enron -- and Congress -- emerged from Thursday's hearing.

Skilling, 48, worked at the top-of-the-line (so they say) McKinsey consulting firm when Enron chief Ken Lay recruited him to help turn the Houston energy company into an aggressively pro-deregulation, "new economy" business that created markets to buy and sell natural gas, electricity and other commodity-type products.

Skilling was nothing if not full of himself, intolerant of others who did not "get" Enron's vision, and intense. How many executives once led their peers and customers on a 1,000-mile, bruising dirt-bike trip through Mexico? How many execs planning an African safari would wish for the type where, as Skilling once said, "someone could actually get killed."

How many executives volunteer to a reporter, "I've never not been successful in business or work, ever."

Riding the 1990s economic boom, Enron ballooned to become the seventh-largest company in the country. Lay liked Skilling enough to make him CEO of the company in February of 2001.

Six months later, on Aug. 14, 2001, Skilling shocked Lay and Enron and Wall Street by abruptly resigning for "personal reasons." Within weeks, financial troubles at Enron began to surface. Less than four months later, Enron sought Chapter 11 bankruptcy protection.

Skilling's unexplained exit -- just before all hell broke loose at Enron -- was too coincidental even for Thursday's congressional panel to ignore.

For a brief moment, Skilling was contrite. In an opening statement, he said he was "devastated by and apologetic about what Enron has come to represent." Skilling did not describe exactly what Enron now represents, but we have a few suggestions. A snakepit of self-dealing executives. A house of cards that ruined thousands of employees' retirement dreams. The new textbook case study of a company corrupted by its own hypergrowth and "monitored" by an overpaid, submissive and easily duped board of directors.

Responding to repeated questions about how he could have overlooked Enron's troubles, Skilling returned again and again to a well rehearsed position. Back in August, when he resigned, "I did not believe the company was in any financial peril," Skilling said.

"I absolutely, unequivocally thought the company was in good shape."

The core of Thursday's hearing focused on partnerships set up by Enron that were supposed to off-load debts from the company's balance sheet. Instead, some of them became sham deals, rife with conflicts of interest, that let some of Enron's own executives invest thousands of dollars and reap millions in return -- often in a few short months.

Skilling insisted he knew nothing was wrong.

But in earlier testimony Thursday, other Enron managers disagreed.

Jordan Mintz, an Enron lawyer, told committee members he had asked Skilling to sign papers authorizing the partnerships, but was rebuffed by Skilling and other senior officers.

Jeffrey McMahon, Enron's one-time treasurer, said Skilling was well aware of the controversial investment partnerships through which Enron hid debt and losses from shareholders.

And an internal investigation of Enron's collapse, released last weekend, states that Skilling and former chairman Lay were told by Enron's board of directors to supervise the complex partnerships.

The extent of self-enrichment from these partnerships by some of Enron's executives is staggering. Ex-CFO Andrew Fastow (who took the Fifth on Thursday) made about $30-million from off-the-books partnerships. Enron exec Michael Kopper reaped $10-million.

Skilling insisted that -- to his knowledge -- the partnerships were structured with enough controls to prevent Fastow and others from gleaning such absurd profits. At the same time, Skilling acknowledged that Enron had to waive its code of ethics in order to allow Fastow and others to run partnerships that were obvious conflicts of interest.

For all its tut-tutting and finger wagging at Skilling, the House subcommittee lost a golden opportunity to press the ex-Enron executive for better answers. Half of the congressional panel seemed befuddled by Enron's complex financial structure and unsure what to demand from Skilling.

Rep. Bart Stupak, D-Mich., asked Skilling if it was true that he was the "ultimate control freak" and therefore likely to have been well informed about Enron's messy financial situation. Skilling preferred to call himself a "controls freak" -- meaning that he ran the company with tight reporting rules.

But could Skilling know everything that was going on in a company the size of Enron? No, Skilling insisted. He depended on Arthur Andersen and Vinson & Elkins, Enron's outside accounting firm and outside law firm, to make sure the company was toeing the financial line.

Was Skilling as hands-off as he suggests? The depiction seems inconsistent with numerous descriptions of his intense involvement and demand of loyalty.

Is it surprising some co-workers called him Darth Vader? No. But it's revealing how proud Skilling was of his nickname.

His testimony Thursday was either a case of uncommon valor or uncommon arrogance.

Not that Skilling does not have plenty left to worry about. For now, he can return to Houston and fend off lawsuits from a new, $4-million mansion where he can track commodity prices on ceiling screens.

Who knows when that will come in handy.

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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