Lay sold $70m of Enron shares because 'the banks told me to'

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The Independent Online

Ken Lay, the former chairman of Enron, denied he sold $70m (£39m) of shares to protect a lavish lifestyle he thought was under threat from the company's impending bankruptcy.

Wrapping up a testy performance on the witness stand, Mr Lay said yesterday he had used the energy trading company's shares as collateral for loans and the sales were dictated by banks nervous about share-price fall.

He is fighting six charges of fraud and conspiracy, which could land him in prison for 10 years if found guilty for his part in America's most traumatic corporate failure in 2001. Enron had been the country's seventh biggest company, worth $70bn.

Mr Lay was replaced on the stand by character witnesses who testified to his being "unusually generous" and "straight as a string". Jurors had earlier heard details of expensive birthday parties funded by his Enron wealth which, the prosecution said, showed how Mr Lay was desperate to shore up public perceptions of the company.

The court was told about a trip in 2001 aboard the Amnesia, where Mr Lay paid $200,000 to celebrate the birthday of his wife, Linda. The couple also splashed out $12,000 that year "to celebrate my birthday, so you can see celebrating my birthday is cheaper than celebrating my wife's birthday", Mr Lay said.

In total, Mr Lay sold $70m of stock back to Enron in 2001, but the sales were not disclosed until after the company went under.

Observers say Mr Lay has shown little of the charm for which he is famed and that his performance on the witness stand contrasted with that of his co-defended, Jeff Skilling, the aggressive former CEO who took a more humble tone. Mr Skilling faces 28 fraud charges.

Character witnesses for Mr Lay included the former mayor of Houston, Bob Lanier, and retired admiral George Kinnear, who met Mr Lay in the late 1960s when both were teaching at George Washington University and then served with him on the board of computer firm, Compaq. Oddly, both described Mr Lay as "straight as a string".

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