Lay’s Lawyer Talks of ‘Betrayal’

Kenneth L. Lay’s lawyer offered a wide- ranging defense of the former Enron Corp. chairman and chief executive Thursday, blaming financial mastermind Andrew S. Fastow for the financial scandal that brought down the energy giant.

Lay’s lawyer, Michael Ramsey, told reporters that Lay had asked him “to express to the public at large the sense of betrayal that he feels relative to what occurred yesterday.”

Fastow, Enron’s former chief financial officer, pleaded guilty Wednesday to charges of conspiracy to commit wire and securities fraud that will send him to prison for up to 10 years. He will also pay nearly $30 million in restitution.

Under terms of the plea deal, Fastow will cooperate with the prosecutors’ continuing investigation into the accounting scandals that drove the company to file for bankruptcy protection amid an uproar that shook Wall Street and the energy markets.

Neither Lay nor Jeffrey K. Skilling, Enron’s former chief executive, has been charged with any crimes.

Ramsey said Lay had no knowledge that any of Enron’s “special-purpose entities” that Fastow created had been used to illegally bolster the company’s books or that Fastow and others were siphoning money into their own pockets.

“Absolutely, Andy Fastow had the trust of Ken Lay and the board up through at least October of 2001,” Ramsey said. “Lay had the right to rely on that person at the very top of the chain.”

Fastow was fired in October 2001, just weeks before the company entered Chapter 11 bankruptcy proceedings, which continue.

Fastow’s diversion of Enron’s money to himself indicated that Lay had no knowledge of the crimes, Ramsey said.

“When a ring of thievery is going on at the very heart of a corporation, you don’t tell the boss and you don’t tell the board,” he said.

Ramsey said Lay would defend himself in public in the coming weeks, noting: “He’s insistent that he wants to talk.... He’s suffered about as much he wishes to suffer hearing rumors and things that are not true in the press.”