| Page 2 of 3 < > |
Lay Blames Fastow for Enron Problems
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
But the first Journal story hit the next day, causing investors increasing discomfort, Lay testified. Two more stories about the LJM partnerships appeared in successive days.
"We thought the Wall Street Journal was on a witch hunt against Andy Fastow and maybe Enron, but certainly Andy Fastow," Lay testified. After the Journal stories, other news outlets began to follow, Lay said, and Enron stock plunged.
Much like Skilling, Lay has given the impression that critics of Enron simply did not understand the company.
An Enron board member drafted a letter to the Journal complaining about the articles, but Lay testified it was never sent.
By October 2001, the LJMs were old news to Lay, he testified, and he couldn't understand why they were of interest to the Journal.
But they were of interest to Enron employees who had read the Journal stories and New York bankers who had lent Enron money.
At an all-employees meeting on Oct. 23, Lay testified that he and the board still had full confidence in Fastow but if they found out he had not acted appropriately, they would fire him.
Fastow was sitting in the front row, Lay said, "and when I made that last point, I was looking directly at him."
Things were happening fast during that period, Lay testified: The following day, Enron treasurer Benjamin Glisan told Lay that New York bankers had told Glisan that they would not make a $1 billion loan to the company that it desperately needed if Fastow remained as the finance chief.
Lay said he told Fastow Glisan's news and said a special board meeting would have to be convened to discuss the situation. Within two hours, Lay testified, he had Enron board members on a conference call. Two board members told Lay that Fastow had earlier said he was owed $45 million compensation for his management of the LJMs, which Lay said was the last straw.
"All the directors felt their trust had been violated" by Fastow, Lay said.
After the call, Lay said he went to Fastow's office and told him the board had placed him on a leave of absence. He was to clear out his personal belongings and leave the building at once.
