Cross-examination by Hueston:
Q.
Mr. Petrocelli asked Mr. Skilling, "Did you have one conversation with one person about getting your story straight?
His answer was: "No.”
I’ll pose that question
to you, Mr. Lay: Did you have one conversation with one
person about getting your story straight for trial?
A
And again, could you elaborate on that, Mr. Hueston? I mean, what story are you talking about?
Q.
Are you having trouble
with that question? I’m just posing the same question?
A.
Well, I'm not sure I –
I’m telling stories up here. I'm up here to answer
your questions.
Q.
Have you
contacted witnesses to get your story straight?
A.
I – I – I don’t know that I contacted
witnesses.
A.
Do you know if I told Mr. Duncan,
the chairman of that committee,
about the Photofete situation?
Q.
What we know and what you know, as the writer of those rules, is that
telling one person-if it ever happened-does not satisfy
your own rules . . .
A.
I
would
think
that
the
chairman
of
that
committee,
just
like
the chairman of any committee at Enron, can make a decision as to what he or she would like to do with that information or needs to do with that
information.
Q.
Even though that's not what's called for by the code
of conduct that you wrote, right?
A.
I think we're now getting into form over substance, Mr. Hueston.
Q.
Well,
that's
what you would call your rules, then,
form over substance, right?
A.
No. The rules were very-very important. But, again,
if I did notify
Mr. Duncan, which I normally
would have, then I would Jet him decide whether to take it up with the full committee or whether, in fact, it was even a large enough investment
that he
should take the time of the
full committee.
Q.
Right. The rules were important, but you didn't
follow them?
A.
Rules are important, but they should not-you should not be a slave to rules,
either....
Q.
One
of the things your attorney
said in opening was, quote, “He
had real estate
in Aspen. He could have sold his home up there. But that’s a
long, tedious process;
and he's got a wife and children to put up with." Do
you remember that statement?
A.
I don't. I find the phrasing kind of interesting; but, no, I do not. I mean, he well may have said it.
Q.
Selling property in Aspen, in fact, was not a long, tedious
process for you, was it?
A.
Yes,
it was....
A.
Yes.
Q.
And you didn’t
list it until January 21st, 2002,
after you sold all your
Enron stock, right?
A.
I’m
not sure exactly when it was listed; but it was certainly
after the bankruptcy....
Q.
All right. Now, listing date was January 21st, right,
sir?
A.
Yes.
Q.
The contract
date
was just two days later. You had a sales contract
in hand just two days later, didn't you?
A.
Yes, we did. Apparently there was a potential buyer known to our real estate
agent up there,
that wanted
the property;
and-and
that transaction was-was negotiated and sold very quickly.
Q.
You got $10 million, the full asking price, within
two days, right?
A.
Yes.
Q.
And,
in fact, it was an all-cash
offer, as well, wasn’t it?
A.
It was.
Q.
Stock first, sales of real estate later?
A.
Yes.
Q.
.
. . [L]et's remind the jury of what you said when you were describing why it is that you felt you didn't
have to tell the employees about these sales
during
this period of time ... And let's read
this. "My
personal belief is that Enron stock is an incredible bargain at current prices,
and we
will
look
back
a
couple
of
years
from
now
and
see
the
great opportunity
that we currently
have." And that’s
the latter part of the quote where it mentions
that you had been buying stock in the last couple of months. And then you answer: "Yes. And in fact, I
had purchased the
4
million
of
shares,
and
I
always
separated
the optional, discretionary
decisions
I was
making with
my
money versus
those ... that, in fact, were forced,
as the margin calls were forcing the sale of some of the other shares." That's what you said, right?
A.
Yes, it is.
Q.
All right. Well, let's look at the choices that you had on July 26th.... [O]n
July
25th
your
line
of credit was
getting a margin
call
for $483,000, correct, sir?
A.
That appears
to
be, yes.
Q.
And in response to
that $483,426
margin call, you sold $4 million of
Enron stock back to Enron, correct?
A.
If I did go back to Enron on the line of credit,
I usually would
go for the full amount.
Q.
[S]o what you're saying
is,
even though
you had a margin call of just $483,000, you went ahead and used that margin call as a reason to draw a full
$4
million down or to sell $4 million of Enron stock back to Enron, right?
A.
I most usually would do that in order to have some additional
liquidity versus whatever the margin call was.
Q.
All right. So a good $3.5
million was not required
by the margin call
that day, correct?
A.
Apparently not....
Q.
So on July 26, sir, on this now familiar document,
it indicates your total
borrowing power on the secured
lines was $9.5 million and in your unsecured lines below an additional $2.25 million.
And so, in fact, you had
over $11 million worth of borrowing options off your
other lines
of credit on that day available to you to satisfy that half-a-million-dollar
or so margin call, correct?
A.
Well, apparently.
Q.
So, your choices on July 26th, sir, to meet the margin call of $483,426
was $11
million worth of balance availability and other lines of credit, right? That's
in category choice number one and the very sort of choice that Mr. Herrold provided
you that we saw by e-mail in May of 2001. Do you remember that?
A.
I'm sorry.
An e-mail by Mr. Herrold
when?
Q.
Remember the May, 2001, e-mail from Mr. Herrold advising you of a choice between accessing money from other lines of credit or selling back
A.
Yes.
Q.
– Enron stock?
A.
Yes.
Q.
So, that's choice number one, $11 million available?
A.
Yes.
Q.
And choice number two, selling assets that were summing
in excess of $13 million of non-Enron stock. That was also available
as an option as well,
correct?
A.
That appears to be so.
Q.
All right. So, sir,
in sum, then, from July 26th through September 4th, when you sold $24 million of stock, you, in fact, had choices other than
selling Enron stock during this period of time leading
up to the online forum; isn't that right, sir?
A.
There were other options,
Mr. Hueston.
Q.
All right. Now, Mr. Beau Herrold assisted you in managing
your finances?
A.
He did.
Q.
But you ultimately
were in charge, correct? He took direction from you?
A.
Well,
certainly, I was-I could
overturn any recommendation or decision that they were making. And-but they would try to run,
certainly, the more important
decisions
by me if they could, I mean, if I was reachable. Quite often, if I was
traveling, they had to go ahead and kind of do whatever
they could do.
Q.
Right.
Well, one of the more important things
would be to work with you to avoid selling any more shares
than you had to during this time period. That would be important to you, correct?
A.
Yes, it would . . .
Q.
It’s an
e-mail from Mr. Herrold to you, dated May 21st, 2001.
THE COURT: All right. It's admitted.
Q.
I'll read it aloud. It's from Mr. Herrold to you, Mr. Lay, on May 21, 2001?
A.
Yes. Yes, it is.
Q
.... He
gives you a choice in this e-mail,
correct?
... "PW"-that would be your PaineWebber line-"has a
deficit
of about 2.1
million. We are on day three. We might have to
fund the account
around $2 million if it doesn't cure itself by tomorrow. Can we use the Enron line again now that it is paid off or would you rather use one of the other lines? B of A"-that's Bank of America-"has
approximately $5.9 million available, which has the most availability of all the lines." He's asking you which choice you'd like to make here, right, sir, to pay off the $2 million that needs
to be applied to the PaineWebber
account?
A.
Yes, he is.
Q.
Okay.
One choice was to use
$5.9 million of available monies on your Bank of America line of credit, correct?
A.
Yes.
Q.
And the other was to use money from your Enron line of credit, right?
A.
Yes.
Q.
And when
you're using the Enron line of credit, just so the jury is clear, you were paying it back with Enron stock, right?
A.
Yes . . .
Q
. . .
So, the choice was clear here, was it not,
sir: Sell Enron stock or use your Bank of America line of credit?
A.
Yes. |