“Maybe I’m Alice in Wonderland here.”
That’s what Enron prosecutor Sean Berkowitz, who is cross-examining Jeff Skilling, pointedly said to the former Enron CEO during Monday’s testimony. For those of us in the courtroom, Monday already feels like a long time ago. (Even the occasional flare-ups of Skilling’s infamous temper – more on that later – didn’t make those wooden benches any softer.)
But the feeling Berkowitz voiced of having fallen down the rabbit hole only grew stronger on Tuesday for some of us in the courtroom. During Skilling’s six days on the witness stand, it has become clear just how wildly different Skilling’s view of reality – on matters large and small – is from that of the prosecution. While the defendant sometimes does have a convincing explanation, there are moments that make you feel like the courtroom has become Wonderland.
One such moment came on Tuesday morning, when Berkowitz was quizzing Skilling about Enron’s so-called “merchant assets.” These were seemingly random investments that Enron made in everything ranging from high-tech companies to oil and gas properties. Many of them were disastrous.
“Sir, isn’t it a fact that the merchant asset portfolio, over half of it was poorly performing?” Berkowitz asked.
“No, I don’t think that’s a fact,” responded Skilling.
Then Berkowitz turned to an internal report Skilling had commissioned. “You asked RAC [Enron’s vaunted internal Risk Assessment and Control group] to perform a ‘lessons-learned’ presentation, didn’t you?”
“I don’t believe I asked for that, no,” Skilling replied.
With that, Berkowitz first showed the jury a June 2000 e-mail from Rick Buy, the head of RAC (, which began, “Skilling has asked me (RAC) to put together a ‘lessons learned’ meeting…”
The resulting documents, which were sent to Skilling, noted that “61 percent of originally expended capital is not meeting expectations” and asked, “Why are 109 deals comprising 50 percent of our investment portfolio not performing according to expectations?” The document also noted that “earnings pressure at Enron causes deals to be done ‘at any price.'”