Tense exchanges between prosecutor Sean Berkowitz and former Enron CEO Jeffrey Skilling grew testier on Tuesday during cross-examination on the company’s quarterly earnings.
The period in question was the second quarter of 2000. The issue: whether Skilling directed Enron employees to push up reported earnings by a penny or two per share in response to consensus estimates. Wall Street had forecast 32 cents per share, reported the Houston Chronicle. As numbers came in from gas sales, Skilling reportedly testified, it first appeared that earnings would rise to 33 cents, and when numbers came in even higher, he directed the company to report 34.
Berkowitz pounced on this, continued the Chronicle, asking whether Skilling was simply concocting a number to meet or beat earnings and, perhaps, forestall a stock sell-off. “I think I’m making a judgment about where I think we’re going to land in the quarter,” Skilling reportedly replied.
The prosecutor’s suggestion that Skilling used “cookie jar reserves” to improperly boost Enron’s earnings received a more agitated response. “Mr. Berkowitz, you’re misinterpreting this chart,” said Skilling, according to the Chronicle. Berkowitz reportedly pushed on with this line of questioning until Skilling blurted out, “Mr. Berkowitz, the entire concept…”
“So the answer’s no,” Berkowitz cut him off, reported the Chronicle.
“It’s not only no,” Skilling reportedly responded. “Do you want me to go back through and walk through it one more time?”
Raising his voice, Skilling repeated that Enron’s earnings practices were legitimate and “had nothing to do with cookie jar reserves” because the numbers hadn’t been released yet, so they weren’t locked down, the paper reported.
Ignoring him, Berkowitz reportedly continued to suggest that Skilling’s earlier testimony was an implicit acknowledgement of wrongdoing.
“I have not said that!” Skilling responded, though he softened his voice to say it, according to the Chronicle.
“Let’s move on” said Berkowitz. “Let’s not move on! Let’s talk about financial reports!” the defendant reportedly responded. (The Wall Street Journal observed that Skilling swung his arm in a karate-chop motion to emphasize his wish.)
According to the Chronicle, Skilling then explained: “There have been no financial reports…this is a March 1 estimate. There have been no published reports. How can you have a mistake on a published report when it won’t be published for months?”
Calmly, Berkowitz reportedly responded: “I know this is difficult for you, Mr. Skilling, and I know you have had trouble answering questions from people who are critical of you. Will you let me move on, Mr. Skilling?”
After jurors were dismissed for the day, Berkowitz said he hoped to finish his cross-examination of Skilling on Wednesday, according to the Chronicle. He would still face a re-direct examination by his own attorney and, perhaps, a re-cross by the prosecution.