Lay blames media storm for Enron’s downfall

HOUSTON — Enron Corp. founder Kenneth Lay blamed the media Tuesday for undercutting his company’s strengths in the weeks before it crashed by highlighting problems at Enron that he said were already cleaned up.

Yet he said more problems, including restatement of previously announced earnings that wiped out nearly $600 million in profit for the previous four years, further pushed Enron toward bankruptcy protection as investor confidence eroded in October and November of 2001.

The restatement is unrelated to criminal counts against Lay, but he noted that it added to the firestorm he said was ignited by the media.

“Obviously, that was a devastating blow to the financial markets and us,” an agitated and sometimes bristling Lay told jurors in his fraud and conspiracy trial.

The former chairman and chief executive appeared to be trying to control the examination by defense lawyer George Secrest in his second day on the stand, saying, “I’m not sure where you’re going with that,” when Secrest asked him to differentiate strategic from non-strategic assets. Lay then affably explained that a strategic asset is considered to be strategic to a certain business.

“He and (former Enron Chief Executive Jeffrey) Skilling could not be more different in their demeanor,” said Philip Hilder, a former federal prosecutor who represents several ex-Enron executives, outside of court. Skilling, Lay’s co-defendant in the federal criminal trial, finished nearly eight days on the witness stand last week.

Testimony in the three-month trial could last another three weeks, lawyers on both sides said Tuesday.