No leniency for Lay
7/17/2004SURE, the government's recent and much publicized "perp walk" of shackled high-profile criminal defendants was for show, but seeing Kenneth Lay, former CEO of Enron Corp., led into a federal courthouse in handcuffs had to satisfy many who lost much under his leadership.
It took nearly three years to reach the top of Enron's corrupt corporate ladder, but the sight of "Kenny Boy" Lay - so nicknamed by his pal, President Bush - surrendering to federal authorities was worth the wait for those he'd burned.
The U.S. Justice Department has been slowly building a case against the former toast of the corporate world and family friend of the Bushes.
Finally, after charging 21 other ex-Enron employees with crimes, including former chief financial officer Andy Fastow and former chief executive Jeff Skilling, it was the founder's time to face felony charges.
A federal grand jury produced a 65-page indictment against Mr. Lay with 11 counts that accuse him of fraud and other charges. The man who was once a celebrity CEO and top campaign contributor to the President, now stands indicted of grand-scale corporate greed and deception that dragged one of Wall Street's premier players into bankruptcy and disgrace.
Enron unraveled in late 2001 following disclosures that it had used off-the-books deals to hide billions of dollars in debt and inflate profits. The collapse of the energy trading giant was devastating, costing investors billions, leaving thousands of employees jobless, and wiping out the retirement savings of many.
The Enron scandal touched off other corporate investigations that uncovered widespread financial fraud in big-name companies like Tyco, WorldCom and Global Crossing.
The scope of white-collar crime in the boardrooms badly shook consumer confidence, pushing stock markets into a tailspin and prompting new federal laws governing corporate behavior.
Through it all President Bush's wealthy benefactor remained above the fray, steadfastly denying any wrongdoing. The shrewd executive who founded and led Enron to prominence before its stunning collapse insisted he didn't know what his chief financial officer and other top executives were up to.
Not surprisingly, federal authorities didn't buy Mr. Lay's defense that he was duped by his Enron underlings and oblivious to their schemes to deceive shareholders, government regulators, and the public. Neither did the U.S. Securities and Exchange Commission, which added Mr. Lay's name to other indicted Enron executives also charged with fraud and insider trading.
After pleading not guilty in federal court, Mr. Lay, 62, told reporters that he was ready to go to trial and anxious to prove his innocence. That should be reassuring to his old patron, the President, who walked stiffly away when asked about his friend's indictment at a campaign appearance in Michigan.
The White House tried to put distance between the two men by saying it had been "quite some time" since the President and Mr. Lay had talked.
The Enron boss who presided over the company as it grew into an energy trading powerhouse and as it fell into financial disaster will have his day in court, along with his hand-picked successor and former chief accounting officer.
Perhaps that's small consolation to those who lost everything on worthless Enron stock. But watching the man head to court in handcuffs no doubt provided at least a small measure of satisfaction.