On the Stand, Founder of Enron Doles Out Blame
Tuesday, April 25, 2006
HOUSTON, April 24 -- Enron Corp. founder Kenneth L. Lay, taking the stand for the first time in his fraud trial, told jurors he took "full responsibility" for the Houston energy company's collapse, even as he went on to blame others for the company's misfortune.
Lay, 64, showed more hard edge than his trademark charm as he singled out short sellers who bet the company's stock would sink, skeptical media reports and illegal dealings by then-finance chief Andrew S. Fastow for the market unrest that led to Enron's undoing.
He also, ever so subtly, attributed problems to the resignation of the man who has sat at the defense table with him for 13 weeks, his protege and the firm's former chief executive Jeffrey K. Skilling.
"I think Mr. Skilling's resignation certainly created some uncertainty that we couldn't have predicted at the time," said Lay, who had planned to leave Enron for an investment partnership before Skilling's announcement. "I should have stepped down. That was my intent; that was my plan. I expect if I had done that, I wouldn't be sitting here right now."
Lay, whom President Bush famously nicknamed Kenny Boy, is the most prominent of business leaders brought low in a wave of investigations of corporate scandals. The trial is the closely watched final chapter in the government's effort to hold accountable executives who prosecutors say enriched themselves at the expense of investors and of workers at companies that failed.
Lay faces a half-dozen criminal charges for statements he made touting the stock after he took over day-to-day operations at Enron in the summer of 2001, a time when prosecutors say he knew the company was crumbling. Lay stepped in after Skilling abruptly resigned for what he said were personal reasons in August 2001.
Lay began his testimony by walking the jury through his impoverished upbringing and his success at the helm of what had been by some measures the nation's seventh-largest public company. Lay testified that he lived the American dream, only to watch it turn into a "nightmare" when he was handcuffed and slapped with criminal charges, accused of lying about Enron's health, two years ago.
"I've been very anxious to tell what I believe is the truth about Enron," Lay said in a strong voice shortly after he was sworn in Monday morning.
His lawyer, George "Mac" Secrest, told him, "Mr. Lay, that day has arrived."
Lay insisted that "the fundamentals of Enron were incredibly strong" that summer, telling jurors that he and Skilling were "very candid" about problems in the Internet division and with several international assets.
"It is absolutely ludicrous that I would step back as CEO and, as the indictment says, pick up the mantle of a conspiracy," he said.
Originally, Lay had hoped he would be tried separately from Skilling and former accounting chief Richard A. Causey, who pleaded guilty just before the trial began. But he wound up in a more difficult situation: facing charges with Skilling in one trial, which will be followed by a separate trial on bank-fraud charges as soon as the jury in the current trial retires to determine its verdict.