Ostrich on the loose

12 May 2006 By Dan Ackman

The judge presiding over the fraud trial said he would allow jurors to consider the socalled ostrich theory of criminal wrongdoing. This means if Lay and Skilling are shown to have put their heads in the sand while subordinates went wild, they could be found guilty.

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Judge Simeon Lake III said he would allow jurors to find the Enron defendants guilty if they deliberately ignored wrongdoing at the company, even if they did not direct it.

This theory allows for a conviction even if the former bosses are not proven to have ordered the accounting misdeeds that gave a false picture of Enron's finances.

Allowing the jury to convict on this basis is particularly controversial with regard to Jeffrey Skilling because his defence has been, in part, that there was nothing wrong with Enron's accounting, and thus nothing for him to be ignorant about.

Of course, the jury could still find that the defendants actively lied, as the government has charged, and convict them on that basis.

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