At some point, Enron will be as dimly remembered as Teapot Dome.* But that time is not yet. This month, roughly five and a half years after the first revelations of exotic off-balance-sheet partnerships, the next act of the Enron drama unfolds. Of particular interest to CFO readers is the fact that, as former CEO Jeffrey Skilling and chairman Kenneth Lay head to trial, they have signaled their intent to mount the “Sergeant Schultz” defense: “The CFO did it! I knew nussing!”
So far we’ve seen variants of this defense play out in the HealthSouth and WorldCom trials, with mixed results. Bernard Ebbers failed to persuade his jury that he left the numbers strictly to Scott Sullivan. Richard Scrushy, on the other hand, successfully claimed ignorance of the shenanigans perpetrated by no fewer than five CFOs who served him at HealthSouth.
With its ties to the Bush White House, Enron is the biggest, baddest scandal of them all, Andrew Fastow, Skilling, and Lay the most sophisticated and well connected of the bunch. Although Fastow has already pleaded guilty, he will be implicated in this trial, too. Given the attention the trial is likely to generate, and the animosity toward all parties charged, we thought it time to take a look at the people who sit beside them in court. As staff writer Kate O’Sullivan explains in our cover story, “The Best Defense,” the lawyers who represent white-collar, headline-grabbing defendants are a breed apart. They often immerse themselves in the arcana of corporate finance, searching for a viable way to defend what many regard as indefensible. Their clients often insist that they look forward to their day in court. With attorneys like these, they may even mean it.
* Those curious about Teapot Dome and other Enron precursors can find more at www.cfo.com/TeapotDome.