Former Enron Chairman Ken Lay finished his cross-examination yesterday, defending his stock sales, the millions he withdrew from Enron as it was collapsing and having ignored warnings from employees about the company's failure. Lay continued wrestling with prosecutor John Hueston through the day's questioning, accusing him of being "unfair" and "mischaracterizing."
Hueston accused Lay of making sure he was taken care of before payouts went to Enron employees, pointing out that the ex-leader withdrew tens of millions of dollars from the company even as Enron slid toward bankruptcy, including a final million only days before Lay announced that employees would get a maximum $4,650 per person. "I wanted to make sure we were not personally filing for bankruptcy," Lay said. Well, obviously.
Lay had said he was forced to take the cash draw-downs, which totaled $4 million each — and later $7.5 million each — to cover margin calls on his personal loans. Hueston showed that the margin calls were no more than $483,000, a fraction of the amount Lay withdrew each time, but Lay said Hueston didn't have the whole picture. Sometimes the margin calls were done by phone, Lay said, and besides, he needed a "cushion" of cash to help cover future expenses. Naturally, Lay said he found it was easiest to go ahead and take the maximum amount — the several million dollars — because it gave him more flexibility.
That led to a discussion about Lay's high-dollar lifestyle. Hueston told jurors about several of Lay's fantastic expenditures, including $20,000 chartering a yacht called the "Amnesia" for his wife's birthday, another $20,000 spent on antiques in Spain and a $32,000 trip to Park City, Utah. Though none of those expenditures were made in Enron's final months, Hueston meant to show that Lay had an extravagant personal life; Lay agreed, though he told Hueston he wasn't sure that was "a pertinent point." He added that, because he had no idea Enron was in trouble, there was no reason he should have curbed his spending in late 2001.
Lay also challenged Hueston's selection of responses from an August 2001 Enron employee survey. Hueston read responses saying Enron was engaged in "accounting trickery" and that "we pride ourselves on bending the rules to meet our needs." Later, defense lawyer George "Mac" Secrest read other responses that praised Enron, which apparently bolstered Lay's contention that Hueston was only picking out the negative comments. Houstonist isn't an expert on business, but it does seem to us that corporate leaders would want to investigate comments about shady accounting and breaking business rules, even if they were anonymous responses to a company survey.
When Hueston turned Lay over to Secrest for further questioning, Lay's demeanor reportedly did a 180 — rather than being angry and confrontational, Lay was downright pleasant, calmly looking over at the jury as he explained things. Secrest reiterated Lay's chartiable involvement and said the Linda and Ken Lay Foundation's sale of 500,000 Enron shares the day before a proposed Enron-Dynegy merger failed was his wife's idea alone.
Lay remains on the stand this morning, to be followed by character witnesses that will include Astros owner Drayton McLane, former mayor Bob Lanier and the Rev. William Lawson.
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