- The Washington Times - Monday, April 24, 2006

HOUSTON (AP) — Enron Corp. founder Kenneth L. Lay declared his innocence yesterday on the witness stand, somberly saying the company’s legacy of lost jobs and wrecked retirement savings pained him even more than the loss of a loved one.

Mr. Lay blamed the implosion of Enron, once the nation’s seventh-largest company, on a series of devastating circumstances that included theft by the chief financial officer, negative press, a bear market and investor anxiety after the September 11 attacks.

“I don’t think there ever was a conspiracy of any kind,” he said.

His testimony, defending against criminal fraud and conspiracy charges that could send him to prison for the rest of his life, represented an extraordinary moment in an era in which Mr. Lay and Enron, fairly or not, have come to be seen as symbols of corporate scandal.

Mr. Lay, 64, a former chairman and chief executive of the company, said he was eager to tell the truth about what happened at Enron, a story he said was distorted by overzealous federal investigators and bad publicity.

Under questioning from a defense attorney, he made a point of accepting “full responsibility for everything that happened at Enron” and acknowledged the thousands of jobs and billions of investor dollars that were vaporized in its collapse.

“I’m sure there’s absolutely nothing in my life, including the loss of life of many of my loved ones, that even comes close to the same level of pain, and the same enduring pain, that has caused,” he said.

He explicitly denied committing fraud, participating in a criminal conspiracy or knowingly misleading investors and employees about the health of the company.

Mr. Lay spoke in conversational and even folksy terms, appearing more relaxed than his co-defendant, former Enron CEO Jeffrey Skilling, who testified earlier this month and played the brilliant strategist to Mr. Lay’s affable visionary.

When Mr. Lay’s attorney, George Secrest, asked him what his worst mistake was as head of Enron, Mr. Lay said the answer was easy: hiring Andrew Fastow, who has admitted stealing tens of millions of dollars from the company.

“It all began with the deceit of Andy Fastow,” Mr. Lay said of the former CFO.

Fastow was a pivotal piece of the government’s case against Mr. Lay and Mr. Skilling, insisting that both men knew the company was in poor health in 2001 even as they were making public statements to the contrary. Fastow has agreed to serve 10 years in prison after pleading guilty to two counts of conspiracy.

In Mr. Lay’s version of events, Fastow’s theft was the beginning of the end for Enron. Mr. Lay also blamed short sellers, who were in effect betting on Enron’s failure, and a series of negative stories in the Wall Street Journal in late 2001.

Set against an economy already reeling from the bursting of the technology-stock bubble and the 2001 terror attacks, Enron was faced with “a firestorm that we couldn’t stop,” Mr. Lay told jurors.

Mr. Lay compared that firestorm to a classic run on the bank, with investors and creditors pulling out cash. He maintained that the company was fundamentally sound as late as six weeks before it entered bankruptcy protection in December 2001.

Mr. Lay also directly rebutted Fastow’s claim that the CFO had given him a rundown in 2001 on huge, looming write-offs, a massive accounting error and deterioration of fragile financial structures Enron reputedly used to mask losses.

Asked whether Fastow ever discussed such a list of impending problems with him, Mr. Lay said: “That did not happen, period.”

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.


Click to Read More

Click to Hide