WHO'S THE SCAPEGOAT?
biz.yahoo.com
Sunday December 30, 11:50 am Eastern Time
Former Enron Execs May Play Blame Game
By C. Bryson Hull
HOUSTON (Reuters) - A subtle blame game may be developing between two former executives most widely suspected of playing key roles in Enron Corp.'s (NYSE:ENE - news) collapse, as each seeks to avoid possible civil and criminal charges from a host of investigations.
Former Chief Executive Jeff Skilling, who resigned this summer after just six months at the helm, and ousted Chief Financial Officer Andrew Fastow have been the subjects of great speculation since Enron began its spiral into the largest Chapter 11 bankruptcy in history, filed on Dec. 2.
Neither man has been charged with any crime nor formally accused of any wrongdoing.
But both have made carefully controlled media appearances in the company of the attorneys representing them in scores of civil lawsuits and government inquiries extending all the way to Congress. In both instances, the men or their lawyers distanced themselves from blame, suggesting others were responsible.
``There are two different public relations strategies being employed, both of which are clearly concerned with criminal charges,'' said David Adler, a Houston defense attorney who specializes in federal cases.
The two executives were conspicuously missing from the public eye as Enron's shockwaves smashed through world markets, leading to persistent but unsubstantiated rumors they had fled the country. Fueling the speculation was word that U.S. attorneys' offices in Houston and New York were investigating the Enron debacle with an eye toward criminal charges.
It is likely that the two are better off looking after their own interests, rather than teaming up to cut a deal together should charges arise, Adler said.
``They could have coinciding interests, but chances are there is going to be such a paper trail that even if they decided to keep quiet about something, the roof is going to cave in on them,'' Adler said. ``Frankly, from what I've seen, it seems they would be better off playing separately.''
The U.S. Securities and Exchange Commission is already looking into off-balance sheet partnerships that Fastow created and managed from both sides of the table. The deals eventually led to a loss of more than $1 billion in shareholder equity, and started the crisis of investor confidence that sparked Enron's fall.
A representative for Fastow did not return a call seeking comment, while a spokeswoman for Skilling said he was on vacation and unavailable.
WHO'S THE SCAPEGOAT?
Skilling chose to make his reentry to the public eye through interviews with the Houston Chronicle and The New York Times, while Fastow surfaced at a packed Dec. 12 press conference where he let one of his lawyers, top legal gun David Boies, do nearly all of the talking.
His lawyers said Fastow, who did little but sit and smile, appeared at Boies' New York offices for the narrow purpose of proving he was not on the run.
Boies said his client was being made a scapegoat by others involved with Enron, but he named no names. Skilling, while he defended the partnerships as a way to reduce risks and save Enron money, was quick to point out that they were Fastow's idea.
He told the Times he was ``shocked'' to find out that Fastow had made $30 million managing them.
Skilling denied any wrongdoing, going so far as to say he had no idea that Enron was in anything but excellent shape when he resigned for what he says were personal reasons on Aug. 14. He said he offered to return to Enron for free in October, but the move was rejected as being too confusing amid all the turmoil.
``One guy is trying to build up the good P.R. front, trying to get out ahead of the government and play the sympathy game, and the other one is saying nothing,'' Adler said.
Both executives have spoken to civil investigators with the SEC, and Fastow's attorneys said he has been approached by the Justice Department, which would handle any criminal matters arising from the collapse. Skilling said the Justice Department had not contacted him as of the interviews on Dec. 21.
Houston defense attorney Kent Schaffer said he did not believe any crimes were committed, but the magnitude of the collapse will lead federal prosecutors to push for criminal charges.
``I would not predict indictments now, but you can bet there will be federal criminal grand juries,'' Schaffer said.
Enron Chairman and Chief Executive Officer Ken Lay, who was Fastow's and Skilling's boss, has kept out of the spotlight as much as possible in recent weeks. He promised to appear at Senate hearings into the collapse in February, turning down invitations to testify earlier on grounds he was concentrating on the business of navigating the bankruptcy case.
Though he has retained lawyers to represent him personally, Lay appears content to let stand the prevailing theory he was not aware of the details of the partnerships. An Enron spokesman could not be reached for comment. |
