Ken Lay, former chief executive and chairman of Enron Corp., took the stand yesterday in his fraud and conspiracy trial, declaring his own innocence and fingering former chief financial officer Andrew Fastow as the guilty party.
Lay, 63, is charged with six counts of fraud and conspiracy for his role in the downfall of the energy-trading giant. On the stand, he testified that it was Fastow's crimes, along with the actions of a few other people, that put the wheels in motion for the company's public demise. Lay said that the emergence of Fastow's side deals provided the final blow, alongside a slowing economy, the Sept. 11 terrorist attacks, short-sellers targeting the company and negative articles appearing in The Wall Street Journal.
Once investors became apprehensive about the company's stability, Lay said that it was only a matter or time before the company bottomed out. Lay said that the resignation of his co-defendant, former Enron chief executive Jeffrey Skilling, just six months into the job, and the decision to make write-offs in October 2001 to clean up the company's books were no more than nails in the coffin.
In retrospect, Lay did say that Enron should have ensured it had a stronger credit rating to protect its business against such a crisis of confidence.
Fastow, 44, sat in the witness chair for most of a week in mid-March, testifying that Lay never objected when executives proposed covering up earnings slumps and that Skilling was well aware of the company's poor financial standing and billions in imbedded losses. Fastow pleaded guilty to two counts of wire and securities fraud in 2004 and faces 10 years in prison. Part of his deal with the government is tied to testifying against his former bosses.Skilling, 52, faces 28 counts of conspiracy, fraud and insider trading. He spent most of last week on the stand, offering explanations for Enron's fall that reports have characterized as much more polished than Lay's plainspoken testimony yesterday. Both men are accused of lying to Enron employees and the public as part of a conspiracy to hide the truth about Enron's shaky financial position. Enron had a market value of more than $68 billion before it filed for bankruptcy in December 2001.
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