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Ken lay major 2000 bush fundraiser { June 26 2004 } Original Source Link: (May no longer be active)
http://www.chron.com/cs/CDA/printstory.mpl/business/2649103http://www.chron.com/cs/CDA/printstory.mpl/business/2649103
June 26, 2004, 7:03PM
Lay: Crimes of others wrecked Enron
Associated Press
Former Enron Corp. chairman Kenneth Lay takes responsibility for the company's spectacular demise because of his position, but adds he personally did nothing illegal and does not deserve to be charged, he said in a interview with The New York Times.
Lay has largely been silent in the 2 1/2 years since Enron declared bankruptcy amid myriad accounting scandals in December 2001. He has declined repeated requests from the Chronicle for an interview.
His interview with the Times comes as prosecutors are closing in; The Chronicle reported last week that prosecutors plan to soon ask a grand jury to indict Lay.
"If anything, being friends with the Bush family, including the president, has made my situation more difficult," said Lay, a major fund-raiser in President Bush's 2000 campaign.
In fact, he believes that first-name relationship ultimately could hurt him "because it's probably a tougher decision not to indict me than to indict me."
Lay also is considered in prosecutors' crosshairs because he is the last well-known Enron figure to have escaped charges so far. Former chief executive Jeffrey Skilling is under indictment and former finance chief Andrew Fastow pleaded guilty and accepted a 10-year prison term in exchange for his cooperation.
Lay, 62, said he understands why outsiders are focused on him.
"I take full responsibility for what happened at Enron," he said. "But saying that, I know in my mind that I did nothing criminal."
Asked if he would consider pleading guilty to anything, he responded "absolutely not."
Lay most blamed Fastow, who prosecutors say was the main architect of several Byzantine schemes that eventually were called into question, though he acknowledges he and his board signed off on maneuvers that ultimately became troublesome for the Houston-based company.
While the main accusation against Lay is that he promoted Enron stock to employees and others even as he was selling as its share price began to tumble in late 2001, his attorney has maintained that the sales were triggered automatically by lenders.
Lay told The Times that his net worth has crumbled from more than $400 million to less than $1 million, not counting millions set aside to repay debt and legal fees. Enron's stock implosion is mostly to blame.
Lay characterized himself as one of the "98 percent of the people who worked at Enron" who were "good, honest, hardworking individuals."
He places Fastow in the other 2 percent.
"We had a chief financial officer and a few other people who in fact mismanaged the company's balance sheet and finances and enriched themselves in a way that once we got into a stressful environment in the marketplace, the company collapsed," he said.
Yet it was Lay's board that took the unusual step of allowing Fastow to have a business conflict with Enron by operating an investment fund that did business with the company and financed some Fastow-related partnerships.
Now that there is evidence Fastow used the complex constructions to manipulate Enron's balance sheet and enrich himself, Lay said it's easy to criticize the latitude Fastow was granted.
"At the time it seemed the appropriate thing to do," he said.
John J. Fahy, a former federal prosecutor, said a right-thinking executive never would have allowed such a setup.
"Your CFO cannot be put in a position where he is in conflict with the company. He is simply too important. The idea is just crazy," Fahy said.
When Lay retook the CEO's reins after his hand-picked successor, Skilling, abruptly resigned in August 2001, he recalled meeting with executive Sherron Watkins and listening to her concerns about the accounting issues that eventually torpedoed the company.
Lay said he recalled Watkins as "very credible, very smart," but "you just don't read one letter coming from a person in middle management and decide, 'Well, we have a serious problem here.'"
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