Associated Press
WASHINGTON — Vilified by lawmakers as a con man who betrayed Americans’ trust, former Enron chairman Kenneth Lay expressed "profound sadness" Tuesday about the impact of Enron’s financial collapse on investors and employees, but rejected pleas to testify about it.
He conceded his silence may cause some to believe "I have something to hide."
Lay told a packed Senate hearing that he was "deeply troubled" by asserting his constitutional right under the Fifth Amendment not to answer questions about the financial dealings that led to Enron’s bankruptcy, a collapse that devastated thousands of workers and investors and rattled Wall Street.
He said he would make a similar declaration should he be directed to appear at any future congressional hearings.
Lay became the fifth executive, plus a senior auditor at the Arthur Andersen accounting firm, to declare his silence by pleading the Fifth. Among them was Andrew Fastow, Enron’s former chief financial officer who was at the heart of a series of complex partnerships that investigators say led to Enron’s downfall in the largest corporate bankruptcy ever.
Last week, former Enron chief executive Jeffrey Skilling said he had only vague knowledge about the Enron partnerships that were allegedly used for little but to hide debt and disguise Enron losses.
Appearing under subpoena, Lay sat stoically for more than an hour as one senator after another chastised him, declaring he had violated Americans’ basic trust by allowing his company to mislead investors. If he didn’t know, he was dramatically out of touch; if he knew, he should have done something about it, they maintained.
Sen. Peter Fitzgerald, R-Ill., said many of Enron’s partnerships resembled a pyramid scheme marked by insider agreements, phony declarations of profits and losses, and complex attempts to hide billions of dollars in corporate debt to inflate Enron’s profits.
Fitzgerald compared Lay — a longtime friend of President George W. Bush and the Bush family and one of the Republican Party’s biggest financial benefactors — an "accomplished confidence man … a carnival barker."
"Obviously, Mr. Lay, the anger here is palpable," said Sen. John Kerry, D-Mass.
In separate testimony, William Powers, the University of Texas law school dean who headed Enron’s internal investigation into the collapse, told the committee it was clear that Lay approved of the partnership arrangements and knew they were being used to keep debt off the balance sheet.
He also said Lay approved Fastow serving a dual role as head of a partnership while still Enron’s chief financial officer, contrary to Enron’s code of ethics, and that he sat in on at least one meeting in which a partnership transaction was discussed.
ized very deeply" about not testifying, but that Silbert had insisted that his client plead the Fifth Amendment that protects him against self incrimination.
In the hallway after the session, Katherine Benedict, 34, a former Enron worker who sat in on the hearing, said she was saddened and disappointed that Lay did not provide more of an explanation.
"We had such reverence for him and such respect for him as our leader," said Benedict, a former Enron marketing specialist who lost $5,000 in her retirement account when Enron stock became virtually worthless. Eventually, she predicted, Lay will have to tell his story in court.
Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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