Judge deals blow to Enron accused

Enron founder Ken Lay is hoping there are brighter times ahead

The judge in the Enron trial has ruled that jurors can find the energy firm's former bosses guilty of deliberately avoiding knowledge of massive fraud.

Enron founder Kenneth Lay and former chief executive Jeffrey Skilling are charged with playing a central role in the firm's collapse in 2001.

They deny the claims, saying that other members of staff were responsible for hiding debts of $32bn (£18bn).

The ruling has raised concerns among the defence team and legal experts.

Keeping watch

Known as the "ostrich instruction", because it refers to a person sticking their head in the sand, the ruling means that prosecutors will need a lower burden of proof to be successful.

However, Mr Skilling's lawyers said that they were concerned by the judge's decision.

ENRON TIMELINE 1985 - Enron formed October 2001 - Enron reports $638m third quarter loss and $1.2bn fall in shareholder equity October 2001 - Securities and Exchange Commission begins inquiry into firm November 2001 - Enron shares sink to 10-year lows as buyout deal falls through and further losses are revealed at the firm December 2001 - Enron files for Chapter 11 bankruptcy 2002 - Criminal investigation of Enron launched 2004 - Skilling and Lay charged over Enron collapse. Former finance chief Andrew Fastow pleads guilty to criminal charges and agrees a 10 year jail term January 2006 - Enron trial begins

"We have never asserted the ostrich defence," said Mr Skilling's lawyer, Daniel Petrocelli.

"We have said all along this was not a case of hear no evil, see no evil. It was a case of there was no evil."

Legal experts said that another worry was that the prosecution has not followed a line of argument that would allow for this verdict.

Speaking to the New York Times, law professor Ellen Podgor said that instead of showing that Mr Lay and Mr Skilling shielded themselves from the truth, the prosecution has claimed they deliberately chose to mislead investors and staff.

"They have presented a case where this guy was on a soap box telling public lies," she explained.

Time for thought

Lawyers for Mr Lay and Mr Skilling rested their defence on Monday and jury deliberations are due to start next week. The trial has been running for 15 weeks.

Mr Lay is facing six charges of conspiracy, and wire and securities fraud, and if found guilty he could spend up to 45 years in jail.

He has been charged alongside Mr Skilling, who is facing 28 charges of conspiracy and fraud.

During questioning that has often been emotional and combative, Mr Lay has portrayed himself as a trusting man who was let down by corrupt staff, especially former finance chief and prosecution witness Andrew Fastow.

Mr Lay repeatedly said that the collapse of Enron was the most painful experience of his life.

He argued that the main reason behind Enron's problems was not fraud, but a loss of confidence in the company by investors and banks following revelations that Mr Fastow had stolen millions from the company.

Prosecutors contest this and claim that the two men were responsible for lies and false earnings statements that boosted Enron's share price.