Skilling: The Man Who Knew...How Much?

Even on his way out the door, Jeffrey K. Skilling couldn't pass up a chance to hype Enron Corp. (ENE ) After stunning investors and employees with his abrupt resignation as CEO on Aug. 14, he flatly denied that the announcement would damage the nation's largest energy trader: "We built a company that 10 years from now, 20 years from now, is going to be a factor to be reckoned with in the energy business," he said.

So much for Skilling's reputation as a visionary. Enron, the seventh-largest company in the U.S. by sales, is barely alive 3 1/2 months later. As bankers, investors, employees, and trading partners scramble to salvage what they can, it's increasingly hard to believe that Skilling, 48, didn't have an inkling of the disaster that lay ahead for the powerhouse he helped create. He continues to insist that he left for personal reasons: "Absolutely. That's the truth," he told BusinessWeek in a brief interview. And he won't talk about Enron's spectacular meltdown. He left the top job after six months without severance pay--which, in this day of sumptuous golden handshakes, just added to the mystery. Skilling did manage to sell Enron shares worth $17.5 million in the first half of the year, according to Thomson Financial/First Call. During that time, the price slid 39%.

CONFLICT? Enron's collapse will only add to the pressure for Skilling to tell what he knew and when he knew it. There's no denying that he holds some responsibility for the mess. As a member of Enron's boared, he supported the creation of at least some of the off-balance-sheet partnerships that apparently hid Enron's debt and allowed it to overstate profits by more than $600 million over four years. And he, along with Chairman Kenneth L. Lay, approved then-CFO Andrew S. Fastow's management of some of those partnerships, even when other executives warned of a conflict of interest.

With Skilling's unexplained departure hanging over Enron, it didn't take much to decimate investor confidence. How closely he supervised Fastow's financial footwork, or whether information was hidden from him, is not yet known. But with the Securities & Exchange Commission and lawyers in shareholder suits looking to him for answers, Skilling still has plenty of chances to come clean.

By Wendy Zellner in Dallas

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