Lay Testimony Wraps up at Enron Trial
JOHN YDSTIE, host:
In a Houston courtroom yesterday, Assistant U.S. Attorney John Hueston finished his cross-examination of former Enron chairman Kenneth Lay. As NPR's Wade Goodwyn reports, the cross-examination ended as it began with accusations and angry replies.
WADE GOODWYN reporting:
Back from the weekend, John Hueston didn't waste any time Monday morning on what was his last day of cross-examination. Hueston wanted to know why Lay allowed Andy Fastow, the company's chief financial officer to run amuck for so long without asking any hard questions.
Hueston laid out for the jury the various warnings Lay had received about Fastow and the off balance sheet partnerships Fastow managed. First, there was Sharon Watkins, a vice president from Fastow's own group who wrote both an alarming memo, then met with Lay personally. There was Vince Kaminski, a man Lay respected, sounding loud and repeated warnings about Fastow to Lay and anybody else who would listen.
Then the Wall Street Journal ran a series of investigative pieces that accurately targeted Fastow's questionable conduct, the same conduct he'll serve 10 years for in federal prison. Still, Lay stuck by Andy Fastow, preferring to thing Fastow was the victim of a witch hunt.
How many emails and notifications would it take for you to start asking questions of Andy Fastow? Hueston asked Lay incredulously. You didn't want confirmation of these facts. That's not true, Lay replied angrily. Lay explained that he and the board of directors were scrambling during those last few months of Enron's existence.
But Hueston continued to throw more evidence in Lay's face. Sir, isn't it fair to say that all these questions and notifications were exposing troubling truths about your company? Lay exploded in exasperation. The body's on gurney, Mr. Hueston, and you carve it up anyway you want to carve it up, he said.
The 64-year-old former corporate titan and the 42-year-old star federal prosecutor traded blows throughout the day, neither giving any quarter, the two evenly matched. Hueston wanted to know why Lay didn't tell Enron's employees the truth about a group of Enron hedges that didn't really transfer risk away from the company.
Don't you think the employees would have liked to have known that risk and losses were actually being transferred away from Enron? Hueston asked Lay. I'm not at all sure they would have wanted to know those kinds of details, Lay replied, causing many Enron employees in attendance to laugh bitterly and shake their heads. Hueston honed in on Ken and Linda Lay's lifestyle during that last year of the company's existence.
Lay borrowed $77 million dollars from a line of credit provided to him by Enron. For his wife's birthday, he chartered a $200,000 yacht. We were living a very expensive lifestyle, Lay explained. It's the kind of lifestyle that's difficult to turn off or on like a spigot. Hueston told the jury how the Ken and Linda Lay Family Foundation, with Ken Lay as the beneficiary, sold 500,000 shares of Enron stock three hours before the company declared bankruptcy. I supposed you're going to tell me that was just a coincidence, huh, Mr. Lay? My wife was in charge, Lay spat back at Hueston. She authorized those sales. I had nothing to do with it, Lay said.
Wade Goodwyn, NPR News, Houston.
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