Lay, Day 5.25: That's a Wrap
Enron founder Kenneth L. Lay finished his testimony Tuesday about two hours into the day, walking off the stand just before 10 a.m.
As soon as he left, a string of character witnesses followed, including Houston Astros owner Drayton McLean, who said, basically, Lay's a good guy but I never did business with him. Given that Lay's on trial for his business dealings, that's an arm's-length handshake from buddy Drayton.
Then follow some technical witnesses and the government rebuttal of the defense case -- about two to three days -- after which each side will take a day in closing arguments before Judge Simeon T. Lake III's instructions to the jury. Finally, after what by then will probably be 16 weeks, the jury gets the trial.
Lay has built his career on being in charge. These past days on the stand must have been terrifying and angering for him -- much like the final days of Enron. He kept trying to wrest control from federal prosecutor John Hueston, but with each tug, he could probably feel the rope slipping through his hands. Hueston would not yield. And it was probably maddening to Lay the way Hueston would not yield: He did not bridle, did not lose his temper. Several times, Lay tried to rile Hueston, to no avail.
Lay continued to speak in CEO-optimist-speak. Heated arguments that came up just short of chairs smashing out of the upper floors of Enron -- according to testimony from other witnesses -- were, in Lay's words, "lively." Going broke was "an issue with liquidity." Multimillion-dollar debts were "obligations" or "commitments." The shock wave that ran through Enron and the investment community with the abrupt resignation of chief executive Jeffrey K. Skilling in August 2001 was the "uncertainty over Jeff's resignation."
And so on.
Earlier, Lay said something that rang true: No one wants to follow a pessimistic leader.
Lay refused to be pessimistic, even as Enron was collapsing all around him, like thousands of stalactites cracking loose from the roof of a cave.
Because of Lay's optimistic spin on calamity, jurors may not have fully grasped how how dire his personal circumstances were, mirroring as they were Enron's collapse.
We lived a lavish lifestyle, Lay testified. It's not easy just to turn that on and off like a spigot, he added. A plea for sympathy from jurors? My colleague Carrie Johnson, who has been daily eyeing the jurors from inside the courtroom, reported that one silently mouthed the word "million" after Lay said it once, regarding his wealth.
To recapitulate:
- Lay sold $70 million of his Enron stock in 2001, because he was
- $110 million in debt;
- okay, let's repeat that: $110 million in debt, because he
- bought three homes in Aspen, Colo., as well as
- three more in Galveston, in addition to his
- luxury penthouse in Houston, while spending
- $200,000 on a chartered yacht for his wife's birthday,
- $12,000 on his own birthday party and nearly
- $5,000 on two(!) nights on the French Riviera.
This was a man who, at the end of 2001, still had a net worth of about $50 million and felt "broke." Again, I'm reminded of Tom Wolfe's excellent "Bonfire of the Vanities," in which he chronicles broker Sherman McCoy's various expenses -- to you or me, excessive; to him, necessary -- and summed it up by writing (can't remember the exact figure): Sherman McCoy was making $1.7 million a year and he was barely getting by.
The point is not to mock Lay's wealth. The point is to try to understand the panic that Lay must have felt as everything he built -- his company, his mountain of wealth, his jet-setting, Davos-attending, captain-of-industry lifestyle -- was disappearing. No amount of positive spin could stop what was happening.
There were no words in Lay's vocabulary for the epic failure of 2001. Nearly five years later, he is still struggling to find them.
By Frank Ahrens |
May 3, 2006; 7:42 AM ET
| Category:
Dispatches
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Posted by: Cliff | May 3, 2006 12:11 PM
Frank - You're doing a great job but this is really bothering me. There is a big difference between "in debt" and "of debt". He could not have been "$110 million in debt" and "...at the end of 2001, still had a net worth of about $50 million".
Posted by: Gregory | May 3, 2006 01:49 PM
Criminals who steal from little old ladies in another state and then joke about it deserve to go to jail regardless of how much they made via their crimes, or the color of their shirt collar.
Lay and Sskilling are CRIMINALS
Posted by: Long Beach, CA | May 3, 2006 01:53 PM
I have not one ounce of sympathy for either Skilling or Lay. I hope the full force of the law weighs down upon them.
Posted by: Jeff M. | May 3, 2006 03:37 PM
It seems to me that the Enron fiasco, our failures in and for the people of Iraq, and our pathethic Katrina recovery efforts have a lot in common.
First: the action(s) have resulted in a mess, possibly in a tragedy. Second: those who were at the helm when the actions took place have done a great job of saying, "Not my fault. How could I have known, etc." And third, the Fourth Estate has been particularly spineless in probing -- where are the old, "Watergate" (not current versions) of Woodward & Bernstein .. or Ed Murrow .. when we need them.
Of all the failures in courage, character, and integrity (Enron, White House, Congress, etc.), the Fourth Estate's may actually be the worst. In short, when will the Fourth Estate stand up & demand that leaders (ha ! what a concept) in both corporate America and in the White House say and act as if "The Buck Stops Here" ?
Courage, character, and integrity seem to be in serious short supply. Everywhere.
Posted by: Serge Polevitzky | May 4, 2006 12:30 PM
The comments to this entry are closed.
Believe it or not, there are laws that govern human evolution. If an individual strays too far from the path of evolution, nature has a way of pulling him back. In the Enron case, the CEOs were blinded the pursuit of wealth that they lost all sense of proportion -- "It's not easy just to turn that on and off like a spigot". So what's happening to them in this trial, can be seen as nature's way of bringing them back to a proper sense of reality -- a full awareness of the gravity of their past actions and of the pain they caused others.