- The Washington Times - Sunday, April 23, 2006

HOUSTON (AP) — Enron Corp. founder Kenneth L. Lay has embraced many roles in his life: economist, business visionary, Houston booster, philanthropist and smooth political glad-hander among them.

Today, he will become his most important witness.

“I’m looking forward to it,” the 64-year-old ex-chairman said last week with the same confident smile that he has displayed since his fraud and conspiracy trial began nearly three months ago. “I want to put more of the facts and the truth out about what happened at Enron.”

For the past two weeks, the trial’s focus rested on often-contentious testimony from Jeffrey Skilling, Mr. Lay’s co-defendant and brief successor as chief executive. The pair have presented a unified defense from the start, so Mr. Lay aims to build on what Mr. Skilling already told jurors: Enron was no bed of fraud and both are not guilty of any wrongdoing.

The government contends that the men repeatedly lied to investors and employees about Enron’s financial health when they reportedly knew that serious turmoil simmered beneath their ebullient optimism. Enron spiraled into bankruptcy protection in December 2001 six weeks after revelations of massive losses heightened scrutiny, leaving thousands jobless and wiping out billions of dollars from investors.

Mr. Lay is expected to be the more unflappable of the two, as he was when they ran the once-adored company that was the nation’s seventh largest until it crashed.

His testimony is expected to last about half as long because he faces six criminal counts to Mr. Skilling’s 28, focusing on his actions from Mr. Skilling’s abrupt resignation in mid-August 2001 through the company’s failure. The charges against Mr. Skilling focus on actions from 1999 through his resignation.

“The great strength that Ken Lay has is that he is remarkably personable, and juries give verdicts to people they like,” said David Berg, a Houston civil litigator. “This was a man who was going to be mayor of Houston, a brilliant man who is enormously likable — someone who can really sell to a jury panel.”

Although the charges against both men differ in scope, they are linked by the overarching conspiracy count that claims they participated in a sprawling effort to portray Enron as strong when they knew accounting tricks hid bad news and weak ventures. Both are charged with fraud and conspiracy, while Skilling also faces charges of insider trading and lying to auditors.

Mr. Skilling told jurors that neither he nor Mr. Lay perpetuated such a ruse. Mr. Lay has said repeatedly that he tried and failed to save a sinking ship, but did nothing illegal.

“He has to tell the jury, in essence, that he viewed Enron as a child that had been diagnosed with a fatal illness. He may have said and done some things in those final days that weren’t accurate, but he didn’t believe what he was seeing, and, in retrospect, he made some mistakes. That’s Mr. Lay’s way out of the courthouse,” Mr. Berg said.

But Mr. Berg said the defense’s stance that no fraud occurred at Enron could be problematic for Mr. Lay. The defendants attribute Enron’s swift failure to bad publicity that siphoned market confidence rather than unsustainable fraudulent accounting maneuvers, overvalued assets that brought in paltry returns and crumbling business units.

“Lay’s biggest obstacle is predicated on an almost unbelievable story: that there was nothing wrong at Enron,” Mr. Berg said.

Prosecution witnesses have testified that when Mr. Lay resumed as CEO after Mr. Skilling’s resignation after just six months in that role, he received warnings of impending disaster while publicly insisting that the company was strong.

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