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Monday, April 24, 2006

Ken Lay Takes the Stand

As Mark Babineck and John Roper report in the Houston Chronicle, Ken Lay finally took the stand today in the federal trial against him and his fellow former Enron CEO, Jeffrey Skilling.

Lay's m.o. from the get-go has been to portray Enron's demise as the result of the illegal self-dealing machinations of Enron finance whiz Andy Fastow and the investor panic which ensued the revelations that Enron's financial sheet was off by billions of dollars. Under this version of events, Lay is as much a victim as all the Enron investors and employees whose pensions and livelihoods were ruined.

On the stand today, Lay tried to reinforce this narrative. He challenged the acocunt of Enron whistleblower Sharon Watkins, who first brought the questionable side deals to Lay's attention. Watkins asked Lay to avoid using Enron's then-current accounting firm (Arthur Andersen) and law firm (Vinson and Elkins), because they had signed off on the sketchy deals.

Lay agreed to look into the matter, but ignored Watkins' plea that he use an independent firm to do so. This was not the action of a man interested in actually verifying and ensuring the accuracy of the financial reporting done by his company, but rather that of a man interested in appearing to do so.

Appearances are deceiving though, in Layworld, where his selling of Enron stock at a time he knew of the company's precarious financial position is not the self-dealing flee-the-ship move that it seems, according to Lay. Rather, he just needed to pay some bills. And Jeff Skilling quitting his job as Enron CEO at the same time? Well, that was because of personal reasons, not because the company was about to tank in the largest U.S. bankruptcy to date.

Pending judicial nullification of some sort, the jurors will ultimately decide whether Ken Lay's story holds up, or is just another whopper in a long series of whoppers in the Enron saga. This is both fitting, and somewhat ironic. When Lay wanted to push energy deregulation at the federal and state level, he did so in large part by passing out massive amounts of campaign cash so that Congress and various state legislatures were favorably disposed to doing so.

In other words, in the pursuit of his own financial benefit, Lay leveraged his company's massive cashflows and his own personal fortune to bypass the will of the people on his way to the bank. Facing jail time, Lay has no other choice than to put his freedom in the hands of his fellow citizens. His hat in hand, he must trust in the people whose bank accounts he helped to empty, and whose democratic institutions he showed so little regard for.

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