Ground Floor: This week saw the start of the biggest corporate trial in US history, with Ken Lay and Jeff Skilling, respectively ex-chairman and former chief executive of Enron, appearing at a Houston court four years after the collapse of the once feared and revered energy company.

Lay and Skilling tried hard to get the trial moved from Houston, where they claim 80 per cent of potential jurors would be biased against them and that publicity from the firm's collapse would hurt their chances of getting a fair trial.

Both face charges of conspiracy to commit securities fraud and, while the case is expected to last months and the evidence may be difficult to follow, the basic prosecution case is fairly simple. It is that Lay and Skilling lied about the financial health of Enron, took part in manipulating financial information and conspired with others to inflate the stock's value; that they knew their deals were not legal and profited from them.

Enron's collapse was cataclysmic for corporate America and the fallout continues, with changes to corporate regulation. The trial is a setback to industry movers, who are trying to roll back those changes.

The defence team's ploy is simple. Blame former chief financial officer, Andrew Fastow, who has already pleaded guilty to fraud charges. They will undoubtedly argue that the Enron deals were complex and that neither Lay nor Skilling could be expected to know every detail, but relied on accountants and other professionals to look after specific details.

I suppose that when you're trying to avoid jail, you'll allow yourself to be painted as an incompetent fool instead of an incompetent criminal and it'll be interesting to see how the jury views it. As always with financial crime, observers are already worried that jurors won't be able to understand the complexities of the deals involved. Rather like the chief executive in that case!

The deals aren't that complicated. What glazes people's minds over are the shell companies' boring names and trying to follow the money trail. Once it is pared down, it's quite easy to follow. One deal involved Enron protecting itself from fluctuations of share prices in companies in which it had a stake. This is aacceptable and prudent exercise. To protect itself, Enron engaged in hedge transactions. The rules in doing this are that the counterparties to the transactions must be independent of each other.

However, the prosecution is claiming that in Enron's hedging transactions, they weren't. One of their counterparties, Talon LLC, was formed by a shareholding of Enron stock and options worth $537 million (€443 million) and a cash holding from a company called LJM2 of $30 million. LJM2, however, was controlled by Andrew Fastow - clearly not independent.

On another occasion, Enron executives persuaded Merrill Lynch to buy power plant barges in Nigeria. It was coming up to year end 1999 and the executives wanted to hit profit targets and trigger bonus payments which they could do if they managed to sell the barges. Not finding any buyers, they suggested to Merrill they could do a deal. Enron lent Merrill $21 million and then Merrill paid Enron $28 million for the barges. Six months later, LJM2 bought the barges back for $7.525 million.

This means Merrill made a risk-free profit on their $7 million investment of just over half a million, and the executives collected their bonuses. But the barges were not actually sold.

Merrill wasn't the only bank to do business with Enron. A motley collection of banks have made payments in settlement of claims against them relating to Enron, including JP Morgan Chase, Citigroup, Royal Bank of Scotland and Canadian Imperial Bank of Commerce.

As always, the bankers say they had no idea that anything was wrong.

Strangely, the fact that highly-paid bankers seem to be unaware of what their clients are actually doing with the money they lend seems to be a fact of business life. Lay and Skilling's united defence against Fastow has been blunted, however, by Richard Causey, an accountant who reported directly to Skilling.

He made a last-minute guilty plea to a charge of securities fraud and is expected to testify against Lay and Skilling. Worryingly for Lay and Skilling, Causey is allegedly providing information to link Skilling to a deal created to take advantage of an expected share price hike following a planned Enron presentation, and another in which they hid losses incurred by the electricity business.

On his website, www.kenlayinfo.com, Lay proclaims his innocence. He says he will do his best to "get the truth out", but others have more information than him. That seems to be Lay's problem. He claims Causey was "terrorised" into pleading guilty because he faced a potential 40-year jail sentence. If found guilty, Lay is also looking at a long stretch.

The judge has promised the case will take no more than four months. It'll probably seem longer to Lay and Skilling.