On the Stand, Founder of Enron Doles Out Blame

Both Skilling and Lay risked taking the stand to defend themselves, though with slightly different agendas. Skilling, who testified for most of last week, passionately described himself as a man more concerned with ideas and building new businesses than the lure of management and administrative duties.

On his first day on the stand, Lay labored to portray himself as a big-picture leader who relied on scores of accountants, lawyers and subordinates while he spent weeks traveling by corporate jet to meet with such dignitaries as the Italian prime minister and Indian heads of state. The man with a doctorate in economics from the University of Houston added: "I've had some accounting in college; I'm not an accountant. I had some statistics in college; I don't think I'm a statistician. Had some physics in college, don't think I'm a physicist."

Wearing a gray suit, blue shirt and red tie, Lay often directly addressed the jury and nine relatives who sat in the front row, including his wife, Linda, and his former wife, Judy. Lay sometimes sharply recast questions posed by his lawyer, offered extensive responses to simple questions and laughed to punctuate his own jokes. Known for his charm, Lay appeared more emphatic than cordial as he looked out at a courtroom filled with curious onlookers and lawyers with a stake in civil lawsuits against him. Among the spectators was Rep. Sheila Jackson Lee (D-Tex.), who greeted Lay warmly during a break in the action.

"He is a civic leader who has contributed to this community," Lee told reporters. "No one can take away what he has done."

Lay told jurors that Enron failed after several factors colluded to create "an environment very ripe to set off an investor panic." Among them, he said, were questions about outside business partnerships run by Fastow, who later admitted to siphoning millions of dollars from Enron. Lay also denounced short sellers, Wall Street's name for investors who bet that the price of a stock will fall. They engaged in what he called "a real conspiracy going back to January 2001" to drive down the stock price, he said. Last, he argued, was a series of negative Wall Street Journal articles beginning in mid-October. "It didn't take long to set the run on the bank in motion," Lay testified.

Lay contradicted testimony from a parade of government witnesses, many of them former Enron insiders who pleaded guilty in exchange for reduced prison sentences. He told the jury that an August 2001 meeting with Fastow, the man Lay said launched Enron's problems, "didn't happen, period." A September management meeting witnesses described as an "ugly" recitation of mounting problems in Lay's view was emotional yet "very productive."

In an area likely to be the focus of cross-examination this week, Lay said he instructed corporate lawyers to "not reinvent the wheel" in probing allegations of improper accounting lodged by executive Sherron Watkins in 2001. The investigation, which was later deemed a "whitewash" by federal lawmakers, uncovered no trouble even though Enron imploded a few months later in part because of scrutiny over the conflicts of interest that Watkins highlighted.

"We've seen a lot of interesting testimony, a lot of interesting people, a lot of allegations, a lot of lies, a lot of misinformation and some truth," Lay testified. "I would have never thought I'd be in federal court charged with criminal charges."