Posted 12:10 AM by Robert

Lower Level

The Wall Street Journal reports:

Federal prosecutors are pressing ahead with their criminal investigation of Mr. Skilling and other top Enron officials, in recent weeks bringing in several lower-level executives to testify before a Houston grand jury. Mr. Skilling, a subject of the probe, potentially could face securities-fraud and perjury charges, lawyers familiar with the matter said.

Certainly some activity suggests more enthusiasm on the part of the prosecutors than no activity would. So the Man Without Qualities may have been premature is detecting despair in the Department of Justice. But while there can always be surprises, it seems unlikely that the main criminal charges of which Mr. Skilling might be charged can likely be proved with testimony of lower-level executives. Of course, it is always possible that the prosecutors may uncover some other crime that can be proved that way: Al Capone did not serve time for murder or bootlegging. And that could help them bring pressure on Mr. Skilling.

Despite some silly statements by the prosecutors (and some fawning media) following their disastrous "win" of the Andersen conviction that "momentum" would force upper-level suspects to turn, nothing of the sort is reported to have happened. Unless one of the upper level suspects begins to cooperate with the prosecutors, the focus on lower-level executives seems more suggestive of desperation than confidence on the prosecutors' part. And the prosecutors' willingness to allow the SEC civil investigation to become more active recently is also not a positive sign in a case of this type, where the Justice Department is attempting to impose pressure on the criminal suspects and should desire complete control, at least if there is serious hope of bringing criminal charges that will stick.

A "low level" focus is better than nothing, and even "low level" grand jury activity should deflect the inevitable election-inspired charges that the Bush administration is allowing the criminal investigation to lapse. But for that very reason, it's hard to make much of this activity. For while I have no doubt that the Department of Justice would love to prosecute at least some Enron officials, I have seen nothing that suggests that is possible at this time. But even if the Department of Justice has despaired of bringing criminal charges, they surely would have enough sense to kick up some dust in the weeks before an election. Such dust could be kicked in perfectly good faith just by calling lower-level executives to the grand jury to see what they have to say under oath, even if nothing much is expected to come of it.

Of course, the prosecutors could almost certainly indict every Enron officer and board member right now. Conviction could be a quite different and potentially quite embarrassing matter - as the Andersen case demonstrated.