Former Enron chief executive Jeffrey Skilling, who was convicted of massive fraud and conspiracy earlier this year, awaited sentencing yesterday as one of the biggest corporate scandals in US history drew closer to its conclusion.
Skilling will learn his fate from US District Judge Simeon Lake without his co-defendant, Enron founder Kenneth Lay, who died of heart failure in July.
Lay's conviction on 10 counts of fraud, conspiracy and banking violations was thrown out on Wednesday because he died before he could appeal the verdict.
Skilling faces a maximum penalty of 185 years in jail after a jury found him guilty in May of 19 counts of conspiracy, fraud and insider trading.
Enron's spectacular collapse in 2001, then the largest corporate bankruptcy in history with more than US$40 billion in outstanding debt, rattled energy and stock markets. Thousands lost their jobs and life savings.
"It was a watershed event and watershed case," said David Berg, a trial lawyer and legal analyst in Houston who has followed the proceedings closely. "I'd rank it up there with Watergate in the way it shook public confidence."
While a raft of other business scandals followed, like Tyco, ImClone, Aldephia and Worldcom, it was Enron that became synonymous with corporate malfeasance.
And Skilling and Lay personified greed for hiding company losses and hyping the stock's value while selling their own shares on the sly.
Legislators invoked their names to justify passage of the Sarbanes-Oxley Act, which aims to improve corporate governance by making executives and boards of public companies personally responsible for accounting statements.
The law's provisions have been in place for two years and businesses complain that compliance is onerous and expensive.
"The result is that we're seeing firms leaving US capital markets," said James Spindler, professor of law and business at the University of Southern California in Los Angeles.
More public companies are going private, remaining private or choosing to list on foreign exchanges instead.
To stem the flight of business, Spindler predicts there will probably be a "refinement but not a revocation" of the law.
Skilling and Lay were unrepentant throughout their widely publicized four-month trial. They claimed they had done nothing wrong and asserted that Enron was a thriving company brought down by unfavorable news reports and the deceit of its chief financial officer, Andrew Fastow.
The government's charges were "a total misrepresentation of the facts," Skilling testified. "I am devastated because a fine corporation was brought to its knees, in my view, unnecessarily."
Fastow, by contrast, was almost self-flagellating on the witness stand, proclaiming his shame and deep sorrow for helping his former bosses defraud the investing public through accounting and financial trickery.
Choking back tears, he testified: "I believe I was extremely greedy and that I lost my moral compass. I've done terrible things that I very much regret."
Fastow pleaded guilty in 2004 and was the prosecution's most effective witness against Skilling and Lay.
He was sentenced to six years in prison last month. He had agreed to serve 10 years in jail but the judge cited his cooperation with prosecutors and his remorse as grounds for serving less time.