back

Ex-Chief of Enron Will Not Testify Before Congress

By: Richard A. Oppel Jr.
The New York Times,February 11, 2002

Washington, Feb. 10- Kenneth L. Lay, Enron's former chairman, exercising his right to avoid incriminating himself, has decided not to testify before Congress on Tuesday about the company's collapse, a spokeswoman said today.

Mr. Lay's decision today follows the hostile questioning last week of Jeffrey K. Skilling, his successor as Enron's chief executive. Three lawmakers involved in Congressional investigations into Enron said today that they had doubts about whether Mr. Skilling's testimony was true. One lawmaker, the chairman of a committee investigating Enron, said that Mr. Skilling might be in jeopardy of perjury charges. Mr. Skilling's lawyer said his client had been truthful.

After Enron executives sold large amounts of stock, the company barred employees from selling shares in their 401(k) plans last fall as the price plummeted. The Labor Department announced today that it was seeking to oust the trustees of Enron's 401(k) plan because they had not adequately protected the participants. Unless the trustees agreed to step down, the department said, it would seek a court order to remove them.

In what would have been the highlight of the Congressional hearings, Mr. Lay had been scheduled to appear before two committees last week but abruptly backed out after his lawyer said he feared those hearings would become too "prosecutorial." The lawyer, Earl J. Silbert, cited comments by lawmakers who suggested that there may have been criminal activity at Enron. But Congressional investigators said that Mr. Lay may have been daunted by the release on Feb. 2 of a report by a special committee of Enron's board saying he failed to properly oversee the company and "bears significant responsibility" for deals that helped bring the company down.

After Mr. Lay refused to appear voluntarily, lawmakers issued subpoenas, and he is still expected to appear on Tuesday before the Senate Commerce Committee. But tonight, Mr. Lay's spokeswoman, Kelly Kimberly, said, "Under the instructions of counsel, Mr. Lay will exercise his Fifth Amendment rights at the hearing Tuesday."

Lawmakers expect Mr. Lay to give the same answer to the House Financial Services Committee, which has issued a subpoena for him to appear on Thursday. Ms. Kimberly said that Mr. Lay "has been focused on Tuesday's hearing, and will decide on future events in the coming days." Mr. Silbert did not return a telephone call today.

Mr. Skilling, Mr. Lay's protégé, was known as the sharp-minded financial expert who built Enron's energy trading business. Mr. Lay was the company's genteel public face, master of the legal and political nuances of deregulation. Congressional investigators said they thought Mr. Lay was trying to avoid taking the Fifth Amendment publicly, on television as four of his former subordinates did last week.

But it is not clear whether his decision was affected by lawmakers' assault on Mr. Skilling's testimony.

On Thursday, Mr. Skilling, who resigned from Enron in August, less than four months before it filed for bankruptcy protection, testified before a House Energy and Commerce subcommittee that he was unaware of the company's use of complex partnerships to hide losses and debts. Those partnerships, central to the company's downfall, are the focus of criminal and civil investigations.

While other executives said that Mr. Skilling had been warned about looming problems related to what were called the LJM partnerships, Mr. Skilling said he had heard nothing. Although two board members testified that, in their understanding, Mr. Skilling had to approve transactions with the partnerships, Mr. Skilling told the panel that he did not, and was not supposed to, approve individual deals with the LJM partnerships.

Today, on the CBS program "Face the Nation," Billy Tauzin, a Louisiana Republican and chairman of the House Energy and Commerce Committee, which heard Mr. Skilling on Thursday, bristled at his statements. "I'm afraid he may have put himself in some legal jeopardy," Mr. Tauzin said.

A perjury indictment "could happen," Mr. Tauzin said. "All of us wanted to know the truth, and I don't think we got it, and I think he's going to have some real problems as a result."

On the same program, Representative James C. Greenwood, a Pennsylvania Republican who is chairman of the Energy and Commerce subcommittee leading the Enron investigation, called Mr. Skilling's testimony "noncredible," and added, "It was, `The dog ate my homework.' I don't think he was forthcoming with us at all."

A lawyer for Mr. Skilling, Bruce Hiler, disputed that Mr. Skilling said anything untrue. "There is no basis for the allegations being made concerning my client's testimony," Mr. Hiler said. "Mr. Skilling has cooperated with regulators and Congress, and we are not going to respond to attempts to twist that testimony, and the testimony of other witnesses, to fit the predetermined views of some. This is a complicated matter with complicated facts easily misunderstood and misconstrued."

Other lawmakers said they also doubted what Mr. Skilling had said. "Nobody does think he was telling the truth," said Senator Ernest F. Hollings, the South Carolina Democrat who is chairman of the Senate Commerce Committee. "I don't believe he thinks so."

On "Face the Nation," Mr. Tauzin cited several parts of Mr. Skilling's testimony that he did not believe. In one instance, according to minutes from a board meeting Mr. Skilling attended, Enron's chief financial officer, Andrew S. Fastow, who headed the LJM partnerships, told directors that Mr. Skilling had approved the deals with them. Asked about that meeting on Thursday, Mr. Skilling said he had no recollection of Mr. Fastow's comments and that he had been distracted because the power had gone out.

Mr. Skilling also testified that he never received documents from a senior lawyer for Enron, Jordan Mintz, about the LJM deals. Mr. Mintz said that he wrote Mr. Skilling a memorandum last May stating that he wanted to bring him some unsigned paperwork for Enron's deals with the LJM partnerships in 2000 so Mr. Skilling could sign them.

Mr. Skilling's testimony "was totally incredible," Mr. Tauzin said. "I mean, he was out of the room, the power was out, he never got the memo?"

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Action on Aging distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.