FOR much of last week a forty-something woman in a business suit occupied a front-row seat at the Houston trial of Jeffrey Skilling, former chief executive of Enron. Witnesses say she paid as much attention to the jury as to Skilling as he gave evidence that he hopes will save him from spending the rest of his life in jail.
Reiko Hasuike usually likes to keep a low profile. One of America’s leading trial consultants, her job is to advise people on strategies likely to win favour in the courtroom. Making the headlines herself is not one of them.
But as Skilling and government prosecutor Sean Berkowitz sparred, Hasuike sustained collateral damage. Pointing her out to Skilling, Berkowitz asked if the two had talked during a break, and then asked Skilling to describe the mystery woman to the jury. “Reiko’s been very helpful to me,” said Skilling.
“She consults you on juror perceptions?” asked Berkowitz.
“She is helpful in trying to help me describe to people what I am trying to say,” said Skilling.
With that, Berkowitz displayed as an exhibit Hasuike’s CV on the website for her company, R&D Strategic Solutions. Hasuike had published articles on “jurors’ perceptions” and “persuasive communication strategies”, Berkowitz told the courtroom.
“Mr Berkowitz, I have nothing to hide,” said Skilling.
Hasuike apparently felt she had something to hide. Her CV has now been pulled from the website and her company is refusing to talk to the press.
But, say legal experts, the damage has been done.
“Juries tend to be offended by the idea that consultants are watching their every move and predicting how they are thinking. Nobody likes feeling manipulated,” said Jacob Zamansky of the New York law firm Zamansky Associates.
Zamansky was in Houston for Hasuike’s unveiling. “She looked very uncomfortable,” he said. “Like she was trying to disappear.”
It was a bad week for Hasuike and only time will tell how bad a week it was for Skilling. But, as the Enron trial enters its final stages, all of corporate America is glued to the proceedings.
Skilling has been preparing for his day in court for close to six years. The US government and shareholders have been on his trail since the former Enron chief’s departure in August 2001, four months before the company landed in bankruptcy.
He faces 35 counts, including fraud, conspiracy and insider trading. “It’s been a tough six years, it’s been a really hard six years,” Skilling said outside the courthouse last week.
For much of that time Skilling has spent millions of dollars consulting experts like Hasuike and poring over records. He argued in court he knew nothing of Enron’s coming collapse.
More audaciously, he argued that Enron was in fact a sound company that had been brought down by “a run on the bank”. Investors turned against the company after the stock-market collapse triggered by the terrorist attacks of September 11, 2001, he argued. That loss of confidence ultimately led to Enron’s demise.
This is not a view shared by the government. Prosecutors say Skilling and his former boss, Kenneth Lay, ran a company that was little more than a house of cards. In their eyes, a web of complex and self- serving financial frauds were designed to fool investors into believing Enron was financially healthy so the company’s executives could pocket millions from sales of inflated stock.
Enron was the first to fall in the wave of corporate crimes that shook America after the millennium. But it is the last to come to trial.
Before Enron’s collapse Lay had close links to President George Bush, and the government seems determined to make sure that there are no signs of favouritism.
Both the government and Skilling have had plenty of time to study the lessons of the other corporate-crime cases.
So far the government has stuck to the strategy it has used throughout this series of prosecutions. Having secured 20 convictions against Enron executives, it is using those lower down the chain to prosecute those higher up. Many of those convicted have now testified — some, but not all, received lighter sentences in return for their co-operation.
With all this evidence against him, legal experts said Skilling must have felt he had to take the stand in order to clear his name. It was a high-risk strategy.
“As a legal matter, Skilling didn’t have to take the stand and the jury would have been told not to draw any conclusions from that,” said Robert Mintz of New Jersey law firm McCarter & English.
“But the government is presenting a solid case. I think it would be difficult for him to get an acquittal without taking the stand.”
The government had not tried to pin down Skilling on specific or complex issues, said Mintz. They had stuck to painting a picture of a compromised man who is not to be trusted.
Berkowitz repeatedly came back to Skilling’s investment in a former girlfriend’s online photo-sharing firm, which did business with Enron. The investment had little to do with the charges against Skilling but everything to do with his character, said Mintz.
Skilling told jurors he invested $60,000 (£34,000) in the firm. He had also told the Securities and Exchange Commission that Photofete.com had a $3,000 contract with Enron.
Berkowitz showed jurors that Skilling had actually invested $180,000 — and that the online company did $450,000 of business with Enron.
After irritably demanding why he had to answer questions about this, Skilling was asked whether the investment violated Enron’s ethics code because he had never disclosed it to the board of directors. “Okay, now I understand,” said Skilling.
Mintz said: “The idea is to make Skilling out to be a serial liar whose view of the business world was that the ends justified the means.”
Skilling, in return, has stuck to the line that he did nothing wrong and that, in fact, there are really no charges to answer.
He is the latest in a long line of executives who have taken the risky decision to try to win over the jury in person. Most have failed.
A recent case was that of Bernard Ebbers, former boss of WorldCom, the telecoms giant that became the world’s biggest bankruptcy case.
As with Enron, the government’s star witness against Ebbers was an insider: Scott Sullivan, WorldCom’s chief financial officer.
Ebbers’s lawyers believed he was a more credible witness than Sullivan. But they were wrong and the 63-year-old was sentenced to 25 years in jail.
“Sometimes people feel they have no choice,” said Mintz. “It’s their one chance to tell their own story.”
This week Lay takes the stand. But you can bet that his jury consultant will be nowhere in sight.
Who are the accused?
ON TRIAL
Jeffrey Skilling, former chief executive, faces 35 charges, including conspiracy and fraud. The prosecution alleges that he attempted to fool investors into thinking that Enron was a healthy company while he and other Enron executives lined their pockets. Kenneth Lay, former chairman, faces seven counts of fraud and conspiracy. The prosecution alleges that Lay perpetuated Skilling’s scheme as Enron tumbled toward bankruptcy.
Both have pleaded innocent.
AWAITING TRIAL
The British bankers David Bermingham, Giles Darby and Gary Mulgrew — the ‘NatWest Three’ — deny accusations of a $7.3m fraud and are fighting extradition from Britain.
GUILTY PLEAS
The prosecution has persuaded 16 people to plead guilty, including Andrew Fastow, former chief finance officer, and Richard Causey, former chief accountant.
CONVICTION AT TRIAL
Four former Merrill Lynch bankers.
CONVICTION OVERTURNED
The conviction of Arthur Andersen, Enron’s accountant, was overturned on appeal — too late to save the company.
