Skilling tells his Enron story

In court this week, Skilling said he was shocked in October 2001 to read articles in The Wall Street Journal questioning the propriety of the LJM partnerships created and controlled by Enron CFO Andrew Fastow.

Mr. Fastow testified earlier in the trial that the partnerships essentially bought low-performing Enron assets and "warehoused" them until Enron bought them back - a move prosecutors say allowed the company to record the sale and achieve strong earnings to show Wall Street.

Skilling said he and Enron's board of directors viewed the LJM partnerships as "independent third parties." Some may have thought they were illegal because the idea was "so new," he said.

After leaving Enron, he said, he felt powerless in the fall of 2001 as the company began to suffer from the bad publicity. "I thought it was in very good shape when I left," he said. "It's almost inconceivable to me, even now, what happened." He said he even tried to return when things were sliding, thinking it would be a show of support to the marketplace.

Skilling testified he doesn't recall trying to sell Enron stock in early September, as prosecutors allege, but did so after the 9/11 attacks because of worries about the stability of US markets.

Daniel Petrocelli, Skilling's lawyer, asked him what he did after resigning: "Did you leave town? Did you set up offshore bank accounts to hide funds? Did you destroy documents, computers? Did you do anything to acknowledge that you might have known something was wrong at Enron?"

"No," was the answer every time.

So far, Skilling has only answered questions put to him by his own attorney. It may not be clear until next week, when prosecutors get an opportunity to grill him, whether Skilling's testimony will help or hurt him.

Other CEOs charged with financial malfeasance have testified in their own behalf, with mixed results. Former WorldCom CEO Bernard Ebbers and former Tyco CEO Dennis Kozlowski did, and were found guilty. Former HealthSouth CEO Richard Scrushy did not, and was acquitted. Mr. Scrushy's lawyer, Jim Parkman, says he knew the case against his client was weak and did not feel the need to put him on the stand.

Martha Stewart's lawyers also kept her off the stand and called just one defense witness. That was a mistake, says Marc Powers, who represented Douglas Faneuil, the prosecution's star witness against Ms. Stewart. "I have always felt that [she] should have testified. It would have humanized her to the jury," he says.

Skilling's defense team is banking that their client, though not known for his winsome ways, will in fact be appealing - even amiable and humble - in the eyes of the jury.

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