Inside the culture and collapse of Enron

In the trial of corporate titans, witnesses describe a world of brains, skill, and deception.

They lied, cheated, and stole. Then giggled about it. They considered their conspirators brilliant and their deception intellectually stimulating.

They were Enron executives, and these are a few of the details they have provided to jurors in the first criminal trial since the energy giant collapsed in a whirlwind of financial trouble three years ago.

While the defendants are not household names and their alleged misdeeds not well-known, the trial is offering a firsthand glimpse into Enron's corporate culture before it filed for bankruptcy - and giving the public an inkling of what to expect in the trial of the company's most senior leaders, Kenneth Lay, Jeffrey Skilling, and Richard Causey.

Last week, the government rested its case three weeks after it began; now the defense attorneys begin their fight to prove the innocence of the six executives charged with conspiring to fake the sale of Nigerian power barges to boost Enron's bottom line. Two are former Enron employees and four are from Merrill Lynch, the bank involved in the transaction.

"This case is a preview of coming attractions from the government," says Gerald Treece, dean of the South Texas College of Law in Houston. "Prosecutors aren't using all their witnesses in this first trial. They are saving their big guns for later."

A landmark step in the Enron case

Although 14 people have pleaded guilty, this trial marks the first time anyone has spoken publicly about their own illegal involvement in the demise of Enron - and the testimony is jarring.

Last week, the government ended its case with its star witness, former Enron Treasurer Ben Glisan Jr. Dressed in an olive-green prison uniform, Mr. Glisan explained to jurors that he was serving five years in a federal prison after pleading guilty a year ago to "helping Enron appear to be financially stronger than it really was. In effect, I lied about the health of the company."

Before testifying for the government, Glisan received immunity from US District Judge Ewing Werlein. He then went on to list nearly a dozen deals, including the Nigerian barge deal, which he believes were illegal, and described one in particular on which he personally made $1 million.

"I believed I was working for a strong, aggressive company that hired very smart people," he said, "some of the brightest minds around. And we solved extremely difficult problems."

But increasingly, he said his time was consumed with "masking those issues."

Inside the Nigerian barge deal

When he started in 1996, Glisan earned $100,000 in salary and a "modest" $20,000 in bonuses; he ended in 2001 with a salary of almost $200,000 and $1 million in bonuses. From the witness stand, he calmly described how he increasingly saw the company manufacturing earnings in his years at Enron.

One such instance he described was the Nigerian barge deal, in which Enron sold the barges to Merrill Lynch, then bought them back six months later at a 15 percent profit to Merrill Lynch. The idea, say prosecutors, was to deceive shareholders by making it look as if Enron had made $12 million on the deal.

"This transaction appeared to be blatantly wrong," said Glisan. "It should have been recorded as a loan." But he mentioned his concerns only briefly to a colleague in December 1999 and said his primary concern was to make sure Merrill Lynch was out of the deal by June 2000 - thereby allowing Enron to live up to its word and retain its strong reputation in the banking industry.

When asked if former Chief Financial Officer Andrew Fastow and his protégé Michael Kopper were "the belly of the beast" in the company, Glisan said, "I'm not going to single out Mr. Fastow and Mr. Kopper because that would be deflecting blame from myself."

But earlier in the trial, Kopper himself testified that he and Fastow began devising illegal plans to divert money to themselves and their family and friends in 1997. He pleaded guilty two years ago to two counts of conspiracy, and from the witness stand said he had stolen about $16.5 million from the company since 1997, and helped Fastow - whom he called "brilliant" and "very greedy" - loot $45 million. He now faces 15 years in prison; his sentence will depend on how well he cooperates with government prosecutors.

During the Nigerian barge deal, Kopper said, Fastow "kind of giggled" when he asked his protégé to buy the barges back with an off-balance sheet partnership that Fastow controlled. Kopper said he considered it a risky proposition, but Fastow told him it would help Enron and make him "look like a hero to Jeff Skilling." Fastow, who pleaded guilty and was sentenced last April to 10 years in prison, has also agreed to testify for the government.

"These guys seemed to keep score by how big a deal they could pull off and the massive quantities of money they could amass," says Professor Treece. "They gave no thought to harm to the investors and the people who relied on them. They were motivated purely by greed."

Next steps in the Enron saga

Defense lawyers are expected to argue that it is the government witnesses and the most senior people at Enron - not the former Enron and Merrill Lynch employees currently on trial - who were the criminals. The defendants, they will insist, were innocent victims and believed the barge deal to be real.

But a win for the government in this trial does not necessarily mean a win in the trial against Lay, Skilling, and Causey, says Treece.

"While any Enron-related case is an uphill battle, this type of transaction is relatively easy for jurors to understand: Was it a loan or an illicit transfer of money? Compared to what Skilling and Lay are accused of, this is math. That will be algebra."

Material from the Associated Press was used in this report.

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