Lay Questioned about Enron Loan, Witness Contacts

During cross-examination at the Enron trial, former Chairman Ken Lay was challenged by the prosecution on money he borrowed from the company. He was also questioned about attempts to contact witnesses before their court appearances.

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Enron founder Ken Lay faced an hour of cross-examination in his trial yesterday. The questions came from Assistant U.S. Attorney John Hueston, and the two clashed repeatedly during that short period of time together, as NPR's Wade Goodwyn reports.

WADE GOODWYN reporting:

Within seconds of the time prosecutor John Hueston began his cross-examination, the tension inside the courtroom shot through the roof.

Hueston immediately attacked Lay for failing to repay seven and a half million dollars he'd borrowed from the company. Just to make it clear, you have not repaid one dollar of the seven million. Isn't that right? Hueston asked. But Lay was well prepared for the government's initial onslaught. There was no principle paid because you blocked it, Mr. Hueston. We tried to repay and you blocked it."

Indeed, the government had stopped Lay from settling up with Enron, thinking of just this moment. But prosecutors were beaten to the punch on this point. Still, Hueston had it all scripted out, so he tried again. As of today, not one dollar repaid. Zero, is the answer. Right? Hueston implored, standing at a big whiteboard, magic marker in hand, ready to make a giant circle for the jury. Zero is not the right answer, Lay said, turning to face Hueston, but you can write it down.

The prosecutor recovered with a question that seemed absurd when he first asked it out loud. Did you contact potential witnesses to get your story straight for trial? Lay hesitated and the courtroom snapped to attention. I wouldn't say that I've contacted witnesses, Lay answered. But over the next ten minutes, Hueston explained to the jury how Lay had sought to contact potential witnesses involved in a meeting with Goldman-Sachs executives in October of 2001, with Enron having only weeks left to live.

Lay and Chief financial Officer Andy Fastow flew to New York. Fastow testified that they were desperately seeking new infusions of capital. But during this same time, Lay was telling the world that Enron was in great shape. So which was it, in great shape, or starving for capital? Lay testified that Fastow is a liar, and that the real reason for the meeting was to discuss warding off possible hostile takeovers.

Which version the jury believes could be important.

Yesterday afternoon, prosecutors hammered Lay for his repeated efforts to find and contact Goldman-Sachs executives who would back up his version of that meeting.

You called Bob Hurst and left a message for him. Do you remember what that message was? Hueston asked. You wanted him to help you out with your recollection of those events. I don't recall that one way or the other, Lay said.

Hueston then forced Lay to admit that he continued his efforts to contact potential witnesses at the banking company, even after their attorneys warned him to stop. And Lay admitted that he'd also tried to contact another key prosecution witness, Vince Kaminski; nine days before Kaminski was to take the stand. Lay said he didn't know Kaminski was going to take the stand. But he was right there on the witness list, Hueston said, incredulously. I always liked talking to Vince, Lay explained.

Earlier in the week, Lay complained, on the stand, that he'd been the victim of character assassination. Hueston asked Lay if he'd participated in any characterization during the trial. Well, are you including yourself on that list? Lay said angrily. Mr. Lay, I'm an Assistant U.S. Attorney, and this is my job, Hueston said, turning his back on Lay and walking away. You can call me anything you want.

Today, John Hueston and Ken Lay pick it up from there.

Wade Goodwyn, NPR News, Houston.

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