Ken Lay Indicted for Enron Collapse

Edward Bennett Williams usually gets the credit, when any is offered, for observing that "'a prosecutor can indict a ham sandwich if he chooses." In the Enron case, there seems to be a party platter of such repasts, and the latest, whose defense is more baloney than ham, is former Enron chairman Ken Lay. While the presumption of innocence is sacrosanct, it is obvious that his only defense is to plead incompetence.

As chairman, Dr. Lay claims that he relied on the CFO, Andrew Fastow, for the accounting details of the operation. Dr. Lay remains defiant that it was Mr. Fastow who committed all the nasty acts that brought Enron low. Mr. Fastow has copped a guilty plea, and Dr. Lay contends that his ties to President Bush have resulted in his indictment.

There is no doubt that Dr. Lay and the president were chummy. President Bush the Lesser is fond of nicknames for people, and Dr. Lay was known as "Kenny Boy." Whether the indictment stems from a desire to embarrass or protect the president is debatable. At the same time, Enron did collapse, and regardless of the political dimension, Dr. Lay has some explaining to do.

Dr. Lay holds a PhD in economics, but that does not necessarily mean that he has or had the accounting background needed to determine if things Mr. Fastow undertook were legal or not. Much more interesting is the fact that he also is a former federal energy regulator. However, to put the most charitable view on things, one may presume that he didn't keep up with changes in the rules after he left public service.

What remains is the letter Sherron Watkins sent him alerting him to accounting irregularities. Dr. Lay says he found her intelligent and credible, but "You just don't read one letter coming from a person in middle management and decide, 'Well, we have a serious problem here'," according to an interview he had last month with the New York Times. This is the smoking gun for many. He was told there was a problem, and he didn't think it was a problem. As chairman, he had a duty to act. So even in the most charitable terms, the question becomes, does a man deserve to go to jail for incompetence?


© Copyright 2004 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.


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