Supreme court to hear appeal by Enron's Skilling

• Former Enron chief sentenced to 24 years for fraud in 2006
• Supreme court unlikely to strike out convictions completely

• Andrew Clark
• guardian.co.uk, Tuesday 13 October 2009 17.15 BST
• Article history

Former Enron chief executive Jeffrey Skilling will have his case reviewed by the US supreme court next year. Photograph: Mark Wilson/Getty Images

The US supreme court is to hear an appeal by the former Enron chief executive Jeffrey Skilling, who is serving a 24-year prison sentence for his role in the spectacular collapse of the Texas-based energy trading company in 2001.

The court's surprise decision to review the case is a significant breakthrough for Skilling. The justices typically only agree to hear appeals from 50 or 60 of the 10,000 people who petition them annually, and they only do so when they believe there is an issue worthy of close examination.

Skilling, 55, was accused of fiddling investors out of billions of dollars in the run-up to the demise of Enron, which went bust in one of the biggest corporate scandals in US history. He appealed on the grounds that a legal concept known as the "honest services" statute is flawed – an argument similar to that of Conrad Black, who also persuaded the supreme court to review his fraud conviction.

The court's announcement drew an enthusiastic welcome from Skilling's defence lawyer, Daniel Petrocelli.

"I cannot wait to get on the phone with Jeff Skilling," said Petrocelli. "We've been waiting now for almost three years for this day. To say we are relieved that finally a court has agreed to review these issues is understatement. Jeff deserves a full, fair and frank hearing on these issues and it now appears that he will get it."

Skilling was convicted on 19 criminal counts of fraud, conspiracy, false statements and insider dealing in May 2006 alongside Enron's former chairman, Ken Lay, who died of a heart attack while awaiting sentencing. A jury found him guilty of presiding over an organisation riddled with accounting tricks hiding ballooning losses. The scandal led to thousands of job losses and prompted the demise of one of the world's biggest accountancy firms, Arthur Andersen.

During his trial, he vehemently protested that he was "absolutely innocent" and pledged that he would fight the charges against him "until the day I die".

An appeals court in New Orleans upheld Skilling's convictions in January, but ordered lower courts to re-visit the length of his sentence. Skilling's lawyers argued that the city of Houston, where Enron was based, was alive with "venomous emotion" and should not have been the venue for his trial.

At the heart of Skilling's challenge is a question surrounding a contentious legal concept of "honest services". Under US law, this is the standard of probity that shareholders or the public are entitled to expect from business leaders or politicians. Both Skilling and Black were convicted of depriving investors of these honest services, but many legal experts say the law in this area is poorly defined.

"The lower courts have diverged on their interpretation of honest services," said Peter Henning, an expert in white-collar crime at Wayne State University in Michigan. "They're going to use Skilling's case and Black's case as opportunities to put some parameters on it and give the courts some guidance on what to look for."

Henning said the supreme court, which will hear Skilling's appeal next year, was unlikely to strike out the convictions altogether. But he said Skilling stood a "decent chance" of a fresh trial if the judges redefine the honest services concept and ask lower courts to examine whether, under fresh guidelines, the government's evidence proved sufficient.

ENRON-01 - Smoke and Mirrors