A Loser, Guilty or Not
History will be unkind to Kenneth L. Lay. The former Enron chairman and chief executive will either be found guilty of fraud, as federal prosecutors allege in a 65-page criminal indictment, or not guilty by reason of staggering ignorance and incompetence. He says he hadn’t a clue as to what was going on as the fraud-ridden energy giant skidded into bankruptcy.
If the “I knew nothing” defense that Lay previewed during a Thursday news conference succeeds, it will be a damning indictment of the corporate culture where this (now) self-proclaimed ignoramus rose to the top and was paid extravagantly. It will indict the press that glorified Lay and other highfliers of the late 1990s as geniuses. And it will indict the Bush administration for allowing Lay to help write the nation’s energy policy.
Lay claims he couldn’t ride herd on hired hands pulling mysterious financial levers inside Enron’s gleaming Houston office tower. Yet the man George W. Bush dubbed “Kenny Boy” milked his presidential friendship to secure key roles for some of those very executives in charting this country’s burn-now, pay-later energy policy. As the Bush administration scrambles to distance itself from Lay, Vice President Dick Cheney continues to stonewall requests for detailed information on his energy panel’s numerous meetings with Lay and those executives.
Lay, 62, took the obligatory perp walk into a federal courthouse Thursday to enter his not-guilty plea on 11 charges of securities fraud and insider trading. Before Enron’s stock tumbled from a high near $85 in 2001, the man who grew up in a rural Missouri house without indoor plumbing reported a net worth of $400 million, largely on the strength of his Enron shares. Lay now believes those shares are the armor that will protect him during upcoming civil and criminal trials. In a recent New York Times interview, he maintained that a criminal who knew Enron was about to implode wouldn’t have kept the shares.
His attorneys will try to shift blame for the nation’s second-largest corporate bankruptcy to other corners of the Enron executive suite. They will argue that other highly paid executives secretly cooked off-the-books partnerships to manipulate Enron’s earnings, covertly hid massive losses to bolster their own fortunes and, eventually, emptied the corporate cookie jar, forcing Enron into bankruptcy.
Lay, who earned a doctorate in economics, honed his skills at the Federal Energy Regulatory Commission and lobbied hard for the deregulated environment that cleared the way for Enron’s meteoric rise, contends he was merely Enron’s public face. He says he didn’t know he was surrounded by evildoers. The real culprits were presumably the 10 high-ranking executives, including former Chief Financial Officer Andrew S. Fastow, who already have pleaded guilty to Enron-related charges, perhaps along with former Chief Executive Jeffrey K. Skilling and a dozen more high-ranking executives still awaiting trials.
Should jurors choose to believe Lay, he will be court-certified as an idiot, and his lawyers rightly celebrated as brilliant.
