Former Enron Chief Kenneth Lay on the Firm's Demise

A month before he goes on trial, Enron's former chairman and CEO Kenneth Lay addresses members of the Houston Forum on how the firm fell apart. His talk follows Enron whistleblower Sherron Watkins and New York Times investigative reporter Kurt Eichenwald, author of A Conspiracy of Fools.

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MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris.

Enron is back in the news today. In Houston, a bankruptcy court judge has ordered 40 former Enron traders to return $20 million of bonuses they received just before the company failed. Enron paid out more than $100 million in bonuses to its traders just before filing for bankruptcy. Lawyers representing employees who got only pink slips have now recovered about $70 million. Eventually, that money will be divided among the 4,500 former employees who filed the suit.

BLOCK: Also in Houston today, Enron's former chairman and CEO Kenneth Lay spoke to a group of Houston business leaders. Lay's criminal trial begins next month. And today he defended his actions and attacked the Justice Department's case against him. From Houston, NPR's Wade Goodwyn reports.

WADE GOODWYN reporting:

The huge ballroom of the J.W. Marriott Hotel was packed to the gunwales with Houston's business leaders, lawyers and journalists. All had come to hear the city's most famous fallen angel, Kenneth Lay.

Mr. KENNETH LAY (Former Chairman & CEO, Enron): I originally entitled my speech "Living in the Crosshairs of the US Criminal Justice System," which is where I believe I've been living for most of the last four years. However, once indicted on July 8th, 2004, I felt a more appropriate title is "Guilty Until Proven Innocent."

GOODWYN: This is not the first time Lay has publicly proclaimed his innocence. Lay disputed the notion that the giant energy trading company's success was a mirage of accounting shenanigans and off-balance-sheet sleight of hand. He said he'd been deceived by a handful of top managers that he trusted, especially former chief financial officer Andrew Fastow. But Lay devoted much of his speech not to defending himself, but attacking the tactics of the federal prosecutors in the Enron Task Force.

Mr. LAY: The Enron Task Force is alleging that whatever it was that happened at Enron, it was part of an overarching conspiracy. The advantages for the Enron Task Force who are trying this case as a conspiracy case are substantial. First, by identifying 100 people--initially, 114 people--as unindicted co-conspirators, they're letting each one of those individuals know that they're literally only the stroke of a pen away from being indicted.

GOODWYN: Lay asserted that he and his defense team were trying to get at the truth, but that prosecutors were using every means at their disposal to keep the truth from being told on the witness stand.

Mr. LAY: Let me cut to the chase: The defense wants more Enron witnesses to testify, yet the Enron Task Force wants to keep Enron witnesses from testifying except those they control. They appear to be committed to keeping the truth out.

GOODWYN: And Lay called on Enron employees not to be cowed by federal prosecutors, to come forth and testify and rally to his and the company's defense.

Mr. LAY: It will only take a few brave individuals who are willing to stand up and say it's time for the truth to come out. If we don't speak out, don't testify to the truth, don't let the light shine in, we will live the rest of our lives under this cloud.

GOODWYN: Ken Lay did express regret about the thousands of Enron employees who lost their jobs, their savings, their retirement accounts and their dreams for the future.

Mr. LAY: Having always put a high priority on valuing and honoring my employees over a 35-year business and government career, the negative effects of the bankruptcy and scandal that the Enron employees and retirees have had to endure is the most devastating and heartbreaking tragedy of my life, and will assuredly continue to haunt me until my death.

GOODWYN: Prosecutors did not respond to Lay's speech. Lay's decision to speak publicly could be risky if the judge hearing the case perceives that he's attempting to influence the jury pool. Ken Lay faces charges of conspiracy and fraud for allegedly taking over the accounting deceptions after CEO Jeffrey Skilling abandoned Enron four months before the company collapsed. He faces more than 100 years in prison if convicted on all counts. Wade Goodwyn, NPR News, Houston.

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