The poster boy of corporate crime, former Enron chief executive Jeff Skilling, is seeking a retrial. A lot is hanging off this case. If Skilling walks free, it means that we shouldn't expect any business executive to be honest.
The nub of Skilling's case boils down to one key point: his lawyers argue that his convictions depends on the so-called "honest services" fraud law that they say is vaguely worded. In a nutshell, the law was conceived to capture political corruption but it's now widely used to snare business leaders even if, critics say, they are not acting for personal gain. So if they're fiddling the books, and not for their own financial gain, it's just fine and normal.
The problem with this argument is that it's absolute crap! Skilling and his team created wholesale financial statement fraud. That fraud propped up the company's stock price substantially. And in any case, Skilling actually made huge profits for himself by unloading his stock while the company was still flying high and the fraud was undiscovered. This is not a little bit of dishonesty. The guy was a crook. As Paul Ausick at InvestorPlace argues, Skilling is a text book example of corporate fraud so the arguments are just a case of chutzpah. "In a nutshell, Skilling is arguing that company managers are under no obligation to be honest. He wants to make the US safe for liars and cheats,'' Ausick says.
But Bloomberg legal columnist Ann Woolner says the Crown Prince of investor fraud might still walk free. If they get rid of the "honest services" statute, that could reverse anywhere from one to 14 of the 19 counts of Skilling's conviction. The rest could be thrown out on the basis of jury selection with the court now looking at the fact that the trial took place in Houston. As Woolner notes, it was "the one city in the world where anti-Enron passions ran hottest, deepest and broadest. Even if jurors entered the courtroom with no such feelings themselves, would they have the backbone to declare these men not guilty when everyone around them wants their hides?"
But even that is ridiculous. That's where the crime took place.
Still, it might drag on. As Wall Street Journal Supreme Court correspondent Jess Bravin notes: "It's hard to imagine, however, that the honest-services law, as currently defined, will survive without the court kicking it across the street to Congress for some reshaping.".
And on the question of venue, it's anyone's guess. Watch this space.
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