CBC Radio's "As It Happens" Interview With John Hueston

The CBC Radio program "As It Happens" had an interview, broadcast last Wednesday, with the lead prosecutor in the Enron case, John Hueston. I was told about it by Nala in the comments section of an earlier entry in this blog, and my own responses show a certain difficulty in getting the program through a dial-up connection. On my last, successful attempt, I spent about an hour listening to the 8-or-so minute interview. There was real consolation, though; the need to reverse track (through using the horizonal scrollbar thingy) at the points where the webcast slipped into "Cell Phone in Tunnel Town" quality gave me lotsa time to make detailed notes. Below is the distillation from them:


The introduction to the interview itself brought up the strike-down of the defense motion to recall David Radler to the stand, which was the most recent event as of the time and day of the broadcast. Csr. Hueston then started off by noting that the government had trouble presenting a clear-cut case of criminal-level fraud; it has been difficult for the prosecution. They’ve tried to show "badges of fraud" to the jury, but they haven't got the message across to the jurors. (I've quoted his words; so are all of the following quotes in this entry.) The defense is trying to shoot down individual components of the prosecution’s case; they’re taking advantage of the holes in it.

The defense has been "enormously successful" in cross-examination of prosecution witnesses, such as James Thompson; defense counsel have "almost converted them into defense witnesses." The defense has done an adequate, if not necessarily sufficient, job of showing that the individual non-compete payments were disclosed. Their cross-examination has buttressed their theme of blaming “bad stewardship” at Hollinger International, a fault of the board of directors, and a hasty decision to charge on the part of the U.S. Attorney. Good cross-examination during the proscution's time at bat has shrunk the time that the defense has needed to present its case.

The prosecution has spent a lot of time on lifestyle exposure, but that tactic can boomerang on its users. It did so in the Tyco case: the jury returned a not guilty verdict with respect to the relevant charges. (Csr. Hueston hints that press hounding/'community relations' have gotten in the way of good prosecution of corporate-fraud cases.) The jury may do the same in this case, as focusing on peripherals of that sort obscures any real crime, if any. (To use academic jargon, there are too many false positives dragged up when using lifestyle indicators. To put it more folkily, the tuna net drags in too many dolphins.)

The second problem that the prosecution has is the "Scrushy problem." Six CFOs testified that they were told to defraud by Richard Scrushy in the HealthSouth case. The jury didn't believe the prosecution because those witnesses got off so lightly after plea bargaining. (The Scrushy problem basically results from an anything-for-a-plea-bargain ethos, a kind of trying too hard. It may result from bad strategizing or inherent vagueness in corporate-fraud laws. I have a hunch that this strategy has worked well when trying other kinds of alleged criminals, charged with a different set of crimes.)

The Scrushy problem may surface with respect to David Radler. The defense has done a good job in showing Mr. Radler to be a frequent liar and clearly self-interested in the plea bargain being approved. Bringing in the six-months-in-jail point was especially clever of Eddie Greenspan; it’s a “shockingly light" sentence to an American jury that remembers the Enron, WorldCom and Tyco cases.

Judge St. Eve’s refusal of the recall motion is only a minor problem for the defense. She ruled fairly. The defense needed to show that something "new and different" had arisen, or that they needed to recall Mr. Radler "to elicit testimony that was critical for an affirmative defense point." If Conrad Black’s defense team had done either of the two, then the motion would have been seriously considered. All they wanted to do, though, was to impugn him further; that's insufficient grounds for recall.

Regarding the dropping of the money-laundering charge, Csr. Hueston made two points. First of all, it’s not very unusual in a case of this kind – he himself, and the rest of his team, had dropped two insider trading charges versus Kenneth Skilling. Dropping a weak charge is "usually wise," as any weak counts in the case suggest a weak case as a whole to the jury. Secondly, though, the prosecution in the Conrad Black et. al. case did so because the defense basically got the prosecutors to back down on a charge. Dropping the charge did clash with a theme in the prosecution's opening statement (the bank robber one.) Doing so, while using that theme, suggests to the jury that the bank robbers got an okay from the government to keep some of the loot. (He didn't mention in this connection the prosecutorial acknowledgement of the legality of the CanWest non-compete payment to Mr. Black, but it is consistent with his structuring of the context of the additional burden on the prosecution that this decision has imposed.)

When asked by Carol Off what the chances of an acquittal for Conrad Black are, after she demurred on the grounds that juries are unpredictable, Csr. Hueston replied, after echoing her demur, that Mr. Black has a good chance at it. Csr. Hueston himself got Ken Lay on all counts and Jeffrey Skilling on almost all of the ones he was charged with, but Richard Scrushy got acquitted. Juries are indeed unpredictable, as it was thought to be almost a certainty that Mr. Scrushy would be convicted. That unpredictability being acknowledged, though, the defense has outperformed the prosecution to the degree that a jury could reasonably claim that the prosecution has not met its burden of proof beyond a reasonable doubt.

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If you're interested in a contemporaneous analysis of Ken Lay's and Jeffrey Skilling's chances by Mr. Scrushy's counsel Donald Watkins, it's in this USA Today article, "Lawyer for Scrushy sees Skilling, Lay as 'doomed'." I need hardly say that Csr. Watkins's prediction proved to be bang-on.