Enron's Biggest Trial Finally Arrives

As Enron began its spectacular collapse in late October 2001, founder and CEO Kenneth Lay got some unsolicited crisis-control advice from an unlikely source. Sherron Watkins, the accounting vice president who would later to be hailed as an Enron "whistle blower" -- urged Lay to counterattack.

Part of her advice was for him to capitalize on the goodwill of his yet untainted grandfatherly image and target blame for the financial crisis on an inner group of overly greedy Enron executives and advisors, the handful who had allegedly hidden some $8-bil in losses from balance sheets and Lay himself. Watkins named former CEO Jeffrey Skilling as one of the conspirators.

Today, the government's Enron Task Force has gained convictions or guilty pleas against 21 defendants for fraud-related crimes in the sudden crash of Enron. They now include Skilling confidante and former CAO Richard Causey, who admitted guilt in late December. Ten more former executives or advisors face criminal charges. And the shell of a bankrupt Enron wrestles with $55-bil more in claims than it has in final assets.

The only constant in the vastly altered Enron landscape seems to be Watkins' advice from four years ago. It obviously didn't save the corporation. But Lay continues to bank on it to try to save himself.

He and Skilling, the two top leaders of the once-giant energy corporation, are set to begin trial Jan 30 on fraud and conspiracy charges of manipulating earnings statements and deceiving investors, analysts and others about Enron's massive debts and failed ventures.

Lay and Skilling, along with their defense team, rely on a steady, stay-on-message mantra of blaming others: They were unknowing victims of a handful of rogue insiders who profited wildly from rigged balance sheets and secret, off-the-books partnerships.

Created: Jan 23, 2006

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