|
Ken lay likely to walk { July 9 2004 } Original Source Link: (May no longer be active)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/07/09/BUGMD7IOVK1.DTLhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/07/09/BUGMD7IOVK1.DTL
Enron's Lay likely to walk
- David Lazarus
Friday, July 9, 2004
Former Enron Chairman Ken Lay may have been handcuffed as he was led into custody Thursday, but the familiar smirk was still on his face, an unabashed declaration that he doesn't think he'll do any time for the crimes he's been charged with.
And he may not. At this point, no smoking gun has been presented by prosecutors after nearly three years of digging into Lay's role in the downfall of the now-bankrupt energy giant.
Moreover, none of the charges in the case relate to Enron's lies and machinations during the California energy crisis.
Lay, 62, pleaded not guilty Thursday to 11 counts of corporate wrongdoing, including securities fraud and making false statements. If convicted, he faces a maximum of 175 years behind bars and millions of dollars in fines. He was released on $500,000 bail.
In an unexpected news conference after entering his plea, Lay gave a strong hint of what his defense will be when the case comes to trial: It was all Andy Fastow's fault.
With a company of Enron's size, Lay said, "you have a lot of senior officers with a lot of authority and in whom you put a lot of trust. Clearly there was one, Andy Fastow, who betrayed this trust and betrayed it very badly. "
Fastow, Enron's former chief financial officer, was the architect of the accounting schemes that attempted to hide billions of dollars in debt. He pleaded guilty in January and agreed to cooperate with prosecutors in return for no more than 10 years in prison.
If the government intends to prove that Lay played a role in the company's financial shell game, the case may hinge largely on Fastow's testimony.
Both Lay and former Enron CEO Jeffrey Skilling say they never knew that illegal activities were being perpetrated. Skilling also has been charged with helping lead the company to ruin and has pleaded not guilty to 35 counts of fraud.
Without documents indicating otherwise -- and none have surfaced to date -- it apparently will be up to Fastow to convince jurors that his two superiors not only were in the loop but were perhaps calling the shots.
No wonder, then, that Lay took pains Thursday to paint Fastow as a liar and a cheat, someone not to be trusted.
As for himself, Lay said he grieves "over the loss of the company and my failure to be able to save it." He stressed, however, that "failure does not equate to a crime."
Robert Bryce, author of "Pipe Dreams: Greed, Ego and the Death of Enron," told me that he doesn't think prosecutors will be able to offer much evidence showing that Lay is accountable for Fastow's transactions.
He said that's why the charges against Lay focus on his efforts to reassure Enron employees and credit rating agencies that all was well as the company's stock went down the toilet prior to the bankruptcy filing in late 2001.
"They're going after Lay for things that will be easy to explain to a jury and for which a paper trail exists," Bryce said. "Remember, they got Al Capone not for being a murderous thief but for tax evasion."
Will this placate the many people -- former Enron workers, investors, Californians -- who for years have seen Lay as the poster boy for corporate malfeasance?
"I'm sure Californians would like to see him treated about the same as Saddam Hussein," Bryce said, laughing.
We won't, though. Barring introduction of evidence that hasn't yet surfaced in public, Lay will continue to insist that he just plain didn't know what was going on at the highest levels of the company he built almost from scratch and turned into the seventh-largest publicly traded firm.
As implausible as this might seem, Lay will argue that while he might be a lousy executive, he's not a criminal mastermind. It may be difficult for prosecutors to prove otherwise.
"What Ken Lay is really guilty of is not what he's been charged with," said Michael Shames, executive director of the Utility Consumers' Action Network in San Diego. "He's really guilty of having masterminded the deeply flawed deregulation scheme that was enacted in California.
"It was Ken Lay who opened the door to all the abuses in the state that followed. That's what he deserves to go to jail for."
But will Lay ever find himself, as California Attorney General Bill Lockyer once put it, inside a cell "with a tattooed dude who says, 'Hi, my name is Spike, honey'"?
Shames thinks not. "The only sacrifice Lay will make is that he'll be put in a minimum-security prison with nine holes instead of 18," he said.
Bryce, the author of "Pipe Dreams," is also skeptical that Lay will ever get much in the way of come-uppance.
"He's a rich man," Bryce observed. "Wealth buys a lot of justice in America."
David Lazarus' column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU's "Mornings on 2." Send tips or feedback to dlazarus@sfchronicle.com.
Page C - 1
|
|
