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CNN Live Event/Special

Skilling May Still Have $66 Million Left From Stock Sales

Aired February 26, 2002 - 12:53   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Want to go back in and listen to the Senate Commerce Committee as they grill one one former Enron executive and two current executives. Let's listen in.

(JOINED IN PROGRESS)

JEFFREY SKILLING, FORMER CEO, ENRON: ...like the tax code. And it has gotten to the point where, I think, someone in anyone's position has to be a specialist to understand the mechanics of what is going on, because there are so many rules that have been promulgated, and that is something that you might want to think about. We ought to go back to the European structure, where it is more what makes sense than what the specific rules are that govern transactions.

SEN. BYRON DORGAN (D), NORTH DAKOTA: But Mr. Skilling, with due respect, I am not going to ask you what needs to be done. I am much more interested in asking you what was done, and was not done inside that corporation.

I'll get advice on what we ought to do in the future from others, but let me ask a question about compensation that relates to your resignation and other things that were going on inside the company. I described the Powers report, which I think is the best face you can put on what was going on in the company, and it described something "rotten" in my judgment.

Now, during that period of time, February '99 to June 2001, did you convert stock worth $66 million at that point, did you sell $66 million in stock sales?

SKILLING: What was the time frame, sir?

DORGAN: February '99 to June 2001?

SKILLING: 2001. I don't know, but -- I don't have the records with me.

DORGAN: Would that be surprising to you to learn that you did that?

SKILLING: No, that would -- that would not be a surprise.

DORGAN: And do you consider $66 million a great deal of money?

SKILLING: Yes, it is, sir.

DORGAN: Do you have most of that?

SKILLING: Yes, I do.

DORGAN: And how do you feel about that, and the employees, one of which wrote me recently, had $330,000 in his 401(k) account, his entire life savings, worked many years for your company, lives in the state of North Dakota. That $330,000 is now worth $1,700. You still have most of your $66 million. That family has lost their life savings. How do we reconcile that? How is it that the people at the top got wealthy and the people at the bottom got broke?

SKILLING: Well, I guess a couple of answers to it. I had a program for many, many years of selling a modest portion of my stock, and over many years that has added up to that number that you've talked about, senator.

I think most employees also sold stock options and stock as those became due as they -- you know, as they matured, and so I would guess that most people did, in fact, over the years, if they were diversifying, and prudent in managing their investments, probably did sell some of their Enron stock. I feel terrible that people that held the stock -- held the stock at the beginning of this year.

I had stock and options worth one hundred -- I think, $170 million, which is a whole lot of money, and I sold $15 million under an SEC 10b-5 plan between January and when I left the company on August 14, 15 million out of $171 million.

I think -- if I thought that there was a concern, I would imagine any economic adviser would say you probably should have sold more, diversified more, but -- I think it is very tough, I mean, I do not know what to say to the employees.

DORGAN: You donated any of that money to the employees' fund?

SKILLING: I can't do anything at this point. I think at this point, I have 36 separate plaintiff's lawsuits against me. It is my expectation that I will spend the next five to 10 years of my life battling those lawsuits. I don't know if I will have anything at the end of that, and I can't transfer anything now, because at this point, that would be considered...

UNIDENTIFIED MALE: (UNINTELLIGIBLE)

SKILLING: Okay. It is a legal issue that I am going to have to deal with, but it is going to be a long drawn out...

DORGAN: One final question, and then -- I assume you probably regret the joke that you told in Las Vegas about the Titanic and the state of California. You were quoted as saying, you know, the difference between the Titanic and the state of California, "when the Titanic went down, the lights were still on," which, I assume, you regret saying now, but it occurs to me, that at least from those of us who view Enron, if one were to make a similar comparison, in the Titanic, the captain went down with the ship.

In Enron, looks to me like the captain first gave himself and friends a bonus, then lowered himself and the top folks down in the life boat, and then hollered up and said, "by the way everything is going to be just fine." Do you now regret what you said about the Titanic and California, given what has happened with Enron itself?

SKILLING: Okay, two issues. One, on the -- regretting the joke, and I will address it. The second one is, I think, it is a pretty bad analogy, senator, because I wasn't on the Titanic. I got off in Ireland because I was on vacation in Ireland, and the Titanic went on to run into some troubles later on. I think that is a better analogy. As far as the joke related to the Titanic, all I can say is that that was at a time of very, very frayed tempers as a result of the situation that was going on in the state of California.

One week prior to that meeting in Las Vegas, where I made that statement, the highest law official in the state of California, Attorney General Bill Lockyer, said -- and let me quote -- "I would love, personally -- I would love to personally escort Ken Lay to an 8 by 10 cell that he could share with a tattooed dude who says -- quote -- 'hi, my name is Spike, honey.'"

That was said -- that was May 22, 2001. That was the kind of stuff that was going on. Can you imagine what tempers were like?

I know Mr. Lay, I've worked with Mr. Lay for a long time. Mr. Lay doesn't deserve prison rape or the suggestion by the top law enforcement official in the state of California that he be raped in prison, when he hadn't been charged with anything, and hadn't been found guilty of any issue.

DORGAN: Let me inquire before we continue, is there anyone on the panel that would require a five minute break at this moment? If not, we will continue to Senator Fitzgerald.

KAGAN: We've been listening to further grilling of Enron former executive Jeffrey Skilling. Senator Byron Dorgan making some very pointed remarks, comparing some of the bankrupt employees, average guys, and the $66 million that Jeffrey Skilling just testified that he still has, as he has profited from Enron.

He did say, Mr. Skilling, that he expects to have legal problems and plaintiff lawsuits over the next five to 10 years of his life, and after that he says he doesn't know how much of that fortune he will have left.

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