Lawmakers scold Lay

Enron chief pleads 5th

He disgraced firm, robbed workers of savings, senators say

Subpoena forces appearance

Ex-CEO expresses `profound sadness' at what happened

February 13, 2002|By Marego Athans | Marego Athans,SUN NATIONAL STAFF

WASHINGTON - Deposed Enron chairman Kenneth L. Lay came here under subpoena yesterday and invoked the Fifth Amendment as a congressional committee - many of whom were recipients of his lavish campaign contributions - chastised him for disgracing the company he built, robbing the savings of employees and investors, and tarnishing the image of American capitalism around the world.

It was a humiliating appearance for a man who had come to Washington a little more than a year ago in the style of visiting royalty, enjoying inner-sanctum status at the inauguration of his friend President Bush, private meetings at the White House to push his energy agenda and clout as the acclaimed leader of the nation's seventh-largest corporation.

He sat scowling as he heard himself denounced as a "carnival barker" and "confidence man" by Sen. Peter Fitzgerald, an Illinois Republican. He heard Sen. Jean Carnahan, a Missouri Democrat tell him, "Enron's conduct violated the most basic of moral principles, principles that all of us try to instill in our children - honesty, integrity, trust, fair play and personal responsibility."

Then he invoked his Fifth Amendment right against self-incrimination and refused to testify before the Senate Committee on Commerce, Science and Transportation.

"I come here today with profound sadness about what happened to Enron," he said. "I am deeply troubled about asserting these rights, because it may be perceived by some [that] I have something to hide."

Lay's appearance followed a week of committee hearings in which former Enron executives, including his protege and short-term successor as chief executive, Jeffrey K. Skilling, lined up to be skewered by lawmakers in front of television cameras.

Lay had been scheduled to testify voluntarily last week, but canceled his appearance after members of Congress went on Sunday talk shows Feb. 3 and accused Enron officials of criminal wrongdoing. After he backed out, two congressional committees issued subpoenas to compel his appearance.

Wearing a dark gray suit and red print tie, the minister's son whose political prowess helped transform an obscure pipeline company into the world's largest energy trader had the uncomfortable look of a man who - for the first time in years - was not in control.

"Obviously, Mr. Lay, the anger here is palpable," said Sen. John Kerry, a Massachusetts Democrat, who asked how the United States could promote democracy and capitalism around the world when one of its biggest corporations had imploded.

Sen. Barbara Boxer, still smoldering over Enron's role in California's energy crisis last year when prices soared amid blackouts, said, "My state was bled dry by price gouging." She said Lay's company played California "for a fool" and cited a Skilling joke: "`You know what the difference is between the state of California and the Titanic? At least when the Titanic went down, the lights were on.'"

She spoke of Lay exerting influence with Bush, the recipient of more than a half-million dollars in Enron campaign contributions, and Vice President Dick Cheney, formerly a fellow Houston energy executive.

"You had a meeting with Dick Cheney, and this is what you handed him, a memo: `The administration should reject any attempt to reregulate wholesale power by adopting price caps or returning to archaic methods of determining the cost base of wholesale power. Price caps will be detrimental to power markets and will discourage private investment.'

"And lo and behold, the next day Vice President Cheney said, when asked ... about price caps, `I don't see that as a possibility. Any package you can wrap it in, any fancy rhetoric you can prop it up with, it doesn't solve the problem.'

"So, clearly, we saw the Enron philosophy being carried out here."

The company and its executives figure repeatedly in the formation of the Bush administration's energy policy last year.

Lay served on Bush's transition advisory team for the Energy Department. And last spring, he gave the White House a list of suggested appointments to the Federal Energy Regulatory Commission. Two were selected by Bush: Pat Wood, a Texas Republican - now commission chairwoman - and Nora Brownell, who was instrumental in deregulating Pennsylvania's energy market, where NewPower, a company formed by Enron, has become a supplier.

In May, the commission's former chairman, Curtis Hebert, said Lay called him to offer Enron's support in helping him keep his job if he embraced Enron's philosophy on deregulation, a proposal that Hebert said he declined.

Cheney has acknowledged that he met with Enron officials six times to talk about energy policy, but refuses to provide records to the General Accounting Office, which has said it will sue the White House for names of the energy industry executives who met with the vice president.

"There's no better example than `Kenny Boy' of cash-and-carry government," said Sen. Ernest F. Hollings, a South Carolina Democrat, using the private nickname bestowed on Lay by Bush.

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