The Enron Trial: Fastow Under Fire

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Watching former Enron Chief Financial Officer Andrew Fastow in the Enron trial this week was, at times, like attending a business school seminar. On the witness stand, testifying for the prosecution against his former colleagues Ken Lay and Jeffrey Skilling, he spoke slowly and clearly, using easy-to-understand metaphors. When asked a question he often backtracked to give fuller, more detailed answers. His testimony was like a crash course in the financial shenanigans that led to Enron's collapse. One lawyer in the audience said listening to Fastow testify for one hour was like reading about the company for 12.

But Fastows cross-examination was also like watching courtroom drama on television. In real-life courtrooms, defense attorneys rarely get to say nasty personal things to the witness without objections from opposing counsel. But the government, reluctant to appear to be defending Fastow, sat back and mostly let Jeffrey Skilling's defense attorney, Daniel Petrocelli, have his way. "Its like fighting a guy with his hands tied behind his back — its a lawyers dream," said one courtroom observer, former Federal prosecutor Michael Wynne.

During his two-day cross-examination, Petrocelli pummeled Fastow with demands for yes or no answers to stark did-you-or-didnt-you questions, such as "Isnt it true you want to make sure Jeff Skilling is found guilty?" and "Isnt it true that you dont want to be blamed for what went wrong at Enron?"

Fastow sat calmly on the front corner of his seat. He filled his cheeks with air and blew them out. He mashed his lips together between questions. His face often fell into a smirk. If there was a question he didnt want to answer, he poured himself a glass of water first. But by the end of the second day of cross-examination, he looked worn out. The more tired he got, the more polite he became. His brow was furrowed and he said that he was a little confused. His answers were shorter, and he said "sir" without the edge. For most of his testimony, he meticiously read every document that Petrocelli handed him. By the afternoon of his second day of cross-examination, when Petrocelli offered several more documents to review and confirm, Fastow asked, Can I just say I believe you and accept it?

Petrocelli accused Fastow of rehearsing his answers. Fastow said it sounded like Petrocelli rehearsed his questions. When Fastow asked Petrocelli to let him finish an answer, Petrocelli told Fastow the trial would move faster if he stopped making speeches.

I dont meant to cut you off, Petrocelli said.

"But you do," Fastow responded.

The defense tried to isolate Fastow, saying he didn't have direct, documented evidence of Skilling and Lay doing anything wrong, and stressing the millions Fastow earned in numerous side deals. Petrocelli asked how much money Fastow made in each deal, then asked how much Skilling had put in the bank. The answer to the second question was always, "Zero."

Petrocelli asked Fastow if Lay and Skilling stole $120 million, as Fastow had. "They stole in different ways," Fastow answered, arguing that inflating earnings and hiding losses made the stock price go up — benefiting senior management, which owned lots of stock.

"That is stealing," Fastow said. "I stole one way, and I stole that way. All I'm saying is that we stole."

The only crack in Fastows composure came during direct examination, when he nearly cried when he talked about misleading his wife and causing her year-long incarceration. But he held the tears in check when Petrocelli pressed him on the same subject, suggesting he had betrayed and sacrificed his wife to save himself life imprisonment. " You love your children, dont you?" Petrocelli said. "You must be consumed with insatiable greed." Fastow kept repeating that he and his wife made decisions that were best for their family.

Petrocelli is finished with Fastow, but the defense isn't. His cross-examination will continue Monday morning, when Ken Lays defense attorney, Michael Ramsey, picks up where Petrocelli left off. Courtroom observers are impressed with the case the prosecution is building up and warn that keeping Fastow on the stand risks taking the focus away from the defendants. "Fastows testimony was dangerous for both sides, said Houston attorney David Berg, author of The Trial Lawyer: What It Takes to Win. "If the government is smart, it will close down its case as soon as it can."