Lay gets out the ‘truth’

Please, don’t anybody put a cork in Kenneth Lay. The former chairman and chief executive officer of Enron Corp. is preparing for his trial next month on conspiracy, fraud and false-statement charges by trying to turn the indictment on its head: It’s the federal prosecutors who are guilty of all of the above.

Last week, he made his case before the prestigious Houston Forum. He says he is anxious to take the stand in his own defense.

What could this man, who fiddled during one of the greatest corporate bankruptcies in U.S. history, be thinking?

Enron collapsed in December 2001. Once a large but unremarkable pipeline company, Enron became an energy-trading goliath feeding off the rush for deregulation of utilities and wholesale energy markets. Enron’s reach was global, and so was its chicanery. In the Northwest, consumers pay substantially higher electricity rates today in part because Enron viciously exploited a power shortage along the West Coast. Company traders created electricity shortages, tied up vital transmission capacity, and gouged consumers with a vengeance. Remember “Fat Boy,” “Get Shorty,” and “Death Star?” All were trading schemes devised to confuse grid operators and utilities desperately trying to keep the lights on.

This was looting, pure and simple. Tapes of traders hooting while they ripped off California grandmothers are among the most damning ever recorded. Fortunately, some have been prosecuted. Others last week were ordered to cough up $20 million in bonuses paid just before Enron filed bankruptcy.

Enron executives awarded $105 million in bonuses as the company plunged towards bankruptcy, a slap in the face to the more than 4,000 workers about to lose their jobs and, many, their retirements. How typical.

Now, incredibly, Lay is calling upon his former minions to step up as “truth-sayers” to counter what he calls prosecutorial abuse and hysteria. He ought to know. Abuse and hysteria were part of the playbook down on Enron’s trading floors.

Lay claims the Enron Task Force, the team of prosecutors who will try him, former CEO Jeff Skilling and former Chief Accounting Officer Rick Causey, has intimidated potential defense witnesses by categorizing them as unindicted co-conspirators whose testimony could expose them to prosecution. A “wave of truth” must counter this “wave of terror,” he says, or the “rock” of truth will be submerged.

Wonder if Winston Churchill, whose metaphor Lay borrows, would think much of the truth the former Enron chief says he is eager to expose?

Lay has, from the day Enron filed bankruptcy, portrayed himself as a victim. Underlings like former Chief Financial Officer Andrew Fastow are the real villains. He, Lay, maintains he was unaware Fastow was concealing Enron losses in affiliates named after “Star Wars” characters.

Enron wasn’t killed by poor execution of its business plan, but by developments like the implosion of the telecommunications industry, and India’s refusal to honor electricity contracts, says Lay, who audaciously adds the “California Energy Crisis” to Enron’s ills. That’s the same market federal regulators estimate Enron squeezed for $1.8 billion in profits in 2000 and 2001.

Comments after Lay’s speech indicate some sympathy, if not support. Others were offended that a corporate leader would attempt to have the buck stop somewhere other than his desk. Many in Houston got burned by Enron, or know somebody who did. Lay seems to think he stands a better chance if he can get the “truth” out on the street before prosecutors — he says — try to suppress it in court. Richard Scrushy succeeded with that strategy in Alabama, where a jury acquitted him of fraud as Chief Executive Officer of HealthSouth Corp. But HealthSouth’s woes — the company remains in business — was not the punch in the stomach to the local economy that Enron’s collapse was.

If Lay has any sense, he might consider adopting a tactic used by another Texan last week. President Bush owned up to his responsibility for invading Iraq based on intelligence failures he says he intends to correct. Lay hasn’t owned up to anything.

Maybe he finally will if he keeps talking.