Enron's former chairman, Kenneth Lay and former CEO, Jeffrey Skilling, are facing charges of fraud with a trial that began in Houston on January 30.
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Enron's former chairman, Kenneth Lay and former CEO, Jeffrey Skilling, are facing charges of fraud with a trial that began in Houston on January 30. Enron, once the seventh-largest company in the US, collapsed in December 2001, owing to off-the-books debt and profit inflation.
More than 16 executives have already pleaded guilty to charges of fraud. Mark Koenig, former Enron IR chief, was the first to testify against the pair in hopes of a more lenient sentence. Koenig brings to the forefront issues of honesty and open communication when dealing with investors and clients. The prosecution hopes to show, through video and audio recordings, that Lay and Skilling repeatedly lied to investors about profits and the shift of money from one unit of the company to another.
Why does it matter?
"The Enron trial is further solidifying public expectations that companies commit themselves to demonstrating clear controls for their shareholders," says Bryan Specht, SVP of corporate affairs at Weber Shandwick. "The rest of the corporate world is being forced to manage their corporate brands with the vigor and resources that previously were only devoted to consumer brands and product launches."
While the deception of investors certainly is an ethical concern for all corporations, it is the legal ramifications of this blatant deception that have brought Enron execs to the courtroom.
"The private sector's rising commitment to transparency, voluntary or otherwise, combined with a greater ability to influence positive change, will see corporations of the future held to standards we historically reserve for elected officials," says Specht.
1 Enron was formed in 1985 by the merger of Houston Natural Gas and Nebraska-based InterNorth. Enron owned more than 37,000 miles of natural gas pipelines.
2 Each of the two defendants is being represented by his own team of four top attorneys. It is the first criminal trial for Skilling's lead attorney, Daniel Petrocelli (above, left).
3 The three-month-long Enron Internet trial ended with a mistrial in July 2005. All five defendants face a new trial concerning charges about their misrepresentation of
the Enron Broadband Services unit.
4 US District Court Judge Sim Lake is presiding over the trial. Appointed to the bench by Ronald Reagan, Lake is best known for his sentencing of a former Dynergy executive.
5 You can bet on the outcome of the trial - whether Lay will be convicted of four counts of fraud and Skilling of more than 16 counts - on Ireland-based Web site, Intrade. The Web site is a futures market where investors can wager on everything from the Enron trial to the Academy Awards.