Digesting Enron

The big story is in: The long-awaited day has come for the Enron trial as Kenneth Lay has been convicted of all six counts against him and Jeffrey Skilling has been convicted of 19 of the 28 counts against him for conspiracy to commit securities and wire fraud. Observers of the Enron case have weighed in across blogs.

Professor Stephen Bainbridge of the blog ProfessorBainbridge has posted some thoughts on the verdict, which he says was somewhat predictable if you were checking with your bookie over at Tradesports. But here's some of Bainbridge's analysis:

"The acquittal of Skilling on some of the insider trading counts suggests the jury approached the issues with an open mind, contrary to defense claims that they could not get a fair trial in Houston.

"It's not the crime, it's the cover up. The real crimes at Enron mainly consisted of turncoat government witness Andrew Fastow's shady deals, but Skilling and, especially, Lay are going down for improperly misrepresenting Enron's fortunes."

The professor says that the Powers Report should be "your 'go to' document for background on the Enron mess."

Meanwhile, over at the WSJ.com's Law Blog, Peter Lattman points out what some observers had noticed: that Lay's testimony was less than flattering. He writes, Was Lay’s Testimony his Downfall? Lattman says:

"In the Law Blog’s view, Lay’s testimony proved fatal. Everyone expected a charming, avuncular presence on the witness stand; instead, what they got was an argumentative, challenging, embittered man who refused to accept any personal responsibility for Enron’s collapse. "

For Skilling, Lattman says, it came down to one thing: Credibility, Credibility, Credibility. He writes:

"A jury will grasp on to things that it can easily understand, like issues of veracity and personal credibility. And during cross-examination Skilling suffered some serious blows in that regard. Here are three aspects of the cross that might have been issues ..."

BusinessWeek has a first-person piece from Jeffrey Skilling's ex-girlfriend, who was dragged into involvement with the case for Lay's and Skilling's combined $270,000 investments in her Internet startup, Photofete. She explains how she had forgotten about the matter until it made front-page news. She writes about the case:

"Skilling and Lay admitted that they had not disclosed their investment in Photofete, though I wish they had! That appeared to constitute a clear violation of the company's ethics rules ...

"Skilling's and Lay's efforts to explain their actions got them into even hotter water. 'Rules are important,' Lay told the jury, 'but you shouldn't be a slave to rules either.' Prosecutor Kathy Ruemmler loved that quote so much that she made it a highlight of her closing argument."