Hi 66 / Lo 39
|
Hi 66 / Lo 39 |
Student Publications
©1991-2007
Last modified:
Contact:
|
Volume 71, Issue 84,
Tuesday, February 7, 2006
News Professors predict Enron trial strategies Faculty members mull potential arguments to be presented by the defense and prosecution by RACHAEL SEELEY
As the second week of the Enron trial begins, professors and the dean of the UH Law Center predicted how they think the trial will proceed. C.T. Bauer College of Accountancy and Taxation professor Agnes Cheng believes the prosecution will focus its case on whether Jeff Skilling and Ken Lay knowingly lied to investors to inflate stock prices, while the defense will focus on the legality of Enron's accounting practices. Cheng said the prosecution will aim to prove none of Enron's accounting practices violated Generally Accepted Accounting Principles. "… From the legal point, they (were) following GAAP … however, (they were) not ethical," Cheng said. Law Center Professor Geraldine Moohr said the Enron defense team might try to confuse the jury by introducing a wealth of complicated accounting documents that the jury will have difficulty understanding. "The defense is going to want to complicate (the case) and say this is (our) accounting scheme, and we were told it was legal by our accountants … and introduce these complexities," Moohr said. "The prosecution will want to avoid that and make this a very simple case about right and wrong." Law Center Dean Nancy Rapoport echoed Moohr's sentiment. "(The prosecution's) best bet is to make the case as simple and straightforward as possible," Rapoport said. The first witness for the prosecution, former Enron chief of investor relations Mark Koeing, said he lied on many occasions to hide the losses of Enron Energy Services and that the practice of lying was commonplace within the company. "The testimony from Mr. Koenig basically (said) that Enron (was) always trying to manipulate their earnings to meet or beat financial analysts (predictions)," Cheng said. Rapoport said the prosecution will do its best to use Koenig's testimony to its advantage. "The prosecution has to show that no matter how you look at this … Lay and Skilling knew what they were doing was beyond the edges and that's why they made (Enron's accounting) so complicated," Rapoport said. One of the defense's first moves was to file a motion to move the trial away from the Houston area, where it says it will be difficult for Skilling and Lay to get a fair trial because of Enron's close ties to Houston's economy. The motion was denied. "The request for moving the trial wasn't without some basis … given the incredible harm that was done to the city and the people (in Houston)," Moohr said. Rapoport said she thinks the judge made the right decision. "What the judge is trying to say is that it's a national case ... frankly, if you owned Enron stock anywhere in the world, you were affected, so we might as well (have the trial) here," Rapoport said. Before its downfall, Enron was one of the top companies in the U.S. When Enron stock crashed, the company declared bankruptcy in 2001. Thousands of Enron employees and investors around the world suffered massive financial losses. "The standard is (Lay and Skilling) knew what they were doing and they did it anyway," Moohr said. The next witness for the defense is Ken Rice, former head of the broadband division. "I am just as anxious as everybody else to see how
(the trial) ends up," Moohr said.
Send comments to dcnews@mail.uh.edu |
To contact the
To contact other members
of
 |