Former Enron chief executive Mr Jeffrey Skilling was arrested yesterday and brought to Houston district court in handcuffs to face 42 counts of insider trading and conspiring to mislead regulators and investors about the company's losses.
Mr Skilling is the highest-ranking executive to be arrested in a scandal that shook corporate America two years ago. He pleaded not guilty to the charges, which carry a total of 325 years in prison and $80 million (€63 million) in fines.
Ten of the counts accuse the former chief executive of insider trading that generated $62.6 million from Enron shares, which he sold in 2000 and 2001 when the stock price was artificially inflated. None of the indictments mentions Enron's former chairman Mr Kenneth Lay, the biggest individual contributor to the election campaigns of President Bush, but he may be next on the Justice Department's list.
The prosecutors have adopted a strategy of pressurising lower-level Enron officials one by one to testify against those higher up and the process seems to be leading inexorably to the executive whom Mr Bush nicknamed "Kenny Boy".
Mr Lay secretly sold stock while telling employees to buy, but Enron whistle-blower Ms Sharon Wadkins has said he may have been "out of the loop" on the schemes to hide losses.
Mr Lay is believed to be in financial trouble, despite his frantic share sell-off before the company imploded, as he had taken out huge loans using now-worthless Enron stock as collateral.
The arrest of Mr Skilling follows a plea bargain under which former chief financial officer Mr Andrew Fastow, the architect of the complex plan to hide losses through bogus partnerships, received 10 years and his wife five months in jail.
A senior executive, Mr David Delainey, who admitted insider trading in October, is also co- operating and Mr Richard Causey, Enron's former chief accounting officer, was arrested a month ago to face similar charges to Mr Skilling.
Mr Skilling defiantly told a Congressional inquiry in 2002 that he was unaware of the fraud going on at Enron, but the prosecution claims it has documentation showing otherwise.
Like other disgraced top executives implicated in America's corporate scandals, Skilling was forced to do the "perp (perpetrator) walk" yesterday after agreeing to give himself up to the FBI in Houston. He was handcuffed and marched in front of television cameras into the court. After pleading not guilty he was released on bail of $5 million and will return to court on March 11th.
The 50-year-old Harvard graduate was regarded as the most brilliant executive at Enron before the schemes to portray the energy-trading company as profitable unravelled. He resigned from the company before it went bankrupt in December 2001.
Several other big names are facing trial in the election year crackdown on corporate malfeasance in the United States including fashion diva Ms Martha Stewart, Adelphia Communications boss Mr John Rigas, and WorldCom executive Mr Scott Sullivan. Sam Waksal of ImClone is serving seven years for insider trading.
