Comments (12)

• Joost

  Though I like the general conclusions about the unfairness towards Mr Lay, the impossibility for him of having a 'fair' trial and the state-worshipping character of the pro trial advocates, I must say I felt a little akward reading such a "Lay is an innocent political victim'-article.

  Being a dutchman I must confess, I have little and only indirect knowledge of this case, brought to me by mainstream Dutch media, but for me the main question would be 'Did he lie willingly and knowingly?'

  Even if he did, Mr. Lay deserves a fair trial, but if he did I will not see him as an innocent victim, but rather as someone who took some risk and lost.

  Published: August 16, 2004 9:39 AM

• R. Garcia

  I agree that government prosecutors are stretching the law trying, as you say, to "criminalize what in many circumstances would have been acceptable business behavior." However I cannot agree that Ken Lay was not criminally negligent at a minimum, or that he is a political prisoner. Unlike Frank Quattrone or Martha Stewart, whose alleged crimes were essentially insignificant acts, Mr. Lay oversaw a fraudulent organization. Even if the fraud was perpetrated by others – Mr. Fastow and Mr. Skilling - Ken Lay had a responsibility to know and understand what was going on, especially when he and the Board agreed to waive conflict of interest policies in connection with Mr. Fastow's partnerships, and more so when warned by Sherron Watkins. His failure to investigate her allegations was a breach of his fiduciary duties as Chairman of the company.

  Mr. Lay may be able to charge others, including the Board, Arthur Anderson, and Vinson & Elkins, of being complicit in his crimes, but he is certainly guilty of participating in a massive fraud. This is not a political crime, even if you are correct that the "most 'damning' charges" relating to his stock sales are exaggerated - as in the charges against Ms. Stewart in connection with her alleged market manipulation of her company's shares.

  The fact that prosecutors are overzealous and that politicians don't care about facts does not exonerate Mr. Lay. Ken Lay did not fail to take credit for, and trumpet, Enron's "accomplishments" before the company failed. I think he is at least as deserving of the credit and media attention for the fraund that has been revealed.

  Published: August 16, 2004 2:59 PM

• Thomas E. Brewton

  In a literal sense, it's hard to judge Mr. Lay, or any corporate malefactors, as criminals. He was just practicisimg what American students have been taught since the 1920s by our public education: Joh Dewey's philosophy of pragmatism, as essential part of socialist Progressive education.

  The message is that right and wrong are unscientific judgments; that there is no such thing as God or personal morality; that the only criterion, called validity, is whether you get whatt you want with the actions you select; and that the end justifies the means.

  Thus the most we can say about Mr. Lay and his fellow corporate manipulators is that they failed the test of Pragmitism.

  Published: August 16, 2004 3:19 PM

• Thomas E. Brewton

  In a literal sense, it's hard to judge Mr. Lay, or any corporate malefactors, as criminals. He was just practicising what American students have been taught since the 1920s by our public education: John Dewey's philosophy of pragmatism, an essential part of socialist Progressive education.

  The message is that right and wrong are unscientific judgments; that there is no such thing as God or personal morality; that the only criterion, called validity, is whether you get what you want with the actions you select; and that the end justifies the means.

  Thus the most we can say about Mr. Lay and his fellow corporate manipulators is that they failed the test of Pragmitism.

  Published: August 16, 2004 3:22 PM

• Mike D.

  The Enron failure has been portrayed as a case of fraud – greedy and unscrupulous executives bankrupted the company for their own gain, causing employees to lose not only their jobs but most of their retirement savings.
  However, this is not a complete picture of what actually happened. Enron was a company that had seen massive growth. It was a company whose business model was built on leverage. The stock had a huge P/E ratio. In order to keep the sales growth going, they kept borrowing more and more money, posting Enron stock as collateral. When things started falling apart, due partly to an increase in the cost of natural gas, plus non payment from a multi-billion dollar power plant in India, the management cooked the books, hoping that given enough time, the market conditions that had brought about the business failure would reverse. However, when market conditions deteriorated further, things quickly unraveled. As the stock price declined, Enron was met with margin calls, forcing them to raise cash by selling stock, or risk having hard assets, such as gas pipelines, seized by creditors. Suppliers cancelled credit agreements. Swap contracts were nullified by invoking the “material adverse change� clause in the standard contracts.

  To summarize:
  1) The failure of the business model preceded the fraud.
  2) The fraud was only perpetrated to try and ward off the business failure.
  3) Senior management lost huge amounts of (paper) profits as a result of the debacle – Ken Lay himself is estimated to have lost close to $100 million in (paper) net worth. Jeff Skilling’s stock and stock options are now worthless.

  From an economics standpoint, business failure is part and parcel of the capitalist system. However, over the last 25 years, the notion of “too big to fail� has crept into the American economy. The first one I remember was Chrysler; then we had the Savings and Loans; then some major banks; then Long Term Capital creditors; and most recently several of the major US airlines. In each case, the Federal Government stepped in to bail out failing companies (with the taxpayer footing the bill). In each case lofty rhetoric was used to justify this corporate welfare – “we need to protect jobs� –“we need to protect people’s savings� – “we need to preserve confidence in the financial institutions�– “we can’t let 9/11 disrupt the transportation system�.
  What we have is a double standard. Did Enron do anything that the Federal Government or the State of California has not done in terms of bogus accounting? Is Ken Lay a bigger liar than Gray Davis or many Senators or Representatives or cabinet members?
  Had the government chose to bail out Enron, would Ken Lay be on trial, would Andersen Consulting be out of business, and would anyone be complaining of fraudulent accounting practices?
  Big business is vilified in America. When a big business fails, people want to see heads roll, and the Federal justice system goes into overdrive to pander to this desire. The article asks “is Ken Lay a criminal?� We will probably not find out. What is clear is that the Fed’s jaws are clamped onto Ken Lay like a pit-bull and they will not let go. In the Michael Milken case there was a trader called Warren Trepp who refused to plead guilty to any offer put on the table. After seven years, the statute of limitations ran out. The Feds would still not let go! They finally offered him a year’s suspension from the Securities Industry. He still refused to take the offer, since he had been retired for several years and was no longer registered!

  
  

  Published: August 16, 2004 7:45 PM

• N . Joseph Potts

  I recently (and unintentionally) was rejected for a federal jury to try someone accused of smuggling drugs into the US. I did this by giving my absolute opposition to the War on Drugs (so MANY wars!) to the courtroom as a reason why I couldn't render a verdict based on the evidence and the law. Later, pondering the matter, I realized that, despite my repeated honest service as a juror in civil and state criminal courts, there was virtually NO federal law (anti-trust, labor, trade-restrictive, patent, etc.) that I COULD serve as an honest juror for. I don't think I could in this case - I don't believe in the "crime." It's a civil matter. No plea bargaining in civil proceedings.

  Published: August 16, 2004 8:17 PM

• Michael Shaw

  The presumption is that Ken Lay is innocent.
  
  Mr. Anderson asserts that that Mr. Lay is a political prisoner. Perhaps he should be.

  Ken Lay was one of very few businessmen made part of Clinton's Council for Sustainable Development. His and Enron’s role in furthering the United Nations Sustainable Development Agenda 21 program included the establishment of a global pollution trading scheme to implement the Kyoto protocols.

  Don't become confused. GW was not protecting us against the tyranny of Sustainable Development by rejecting Kyoto, which collapsed Enron. It was simply politically expedient for Bush; all the while the Sustainable machine marched on. Remember, the Rio Accords (Agenda 21) were executed by the President’s dad, George Herbert Walker. GW is on board with the globalist march.

  Lay's major move in life was his high level involvement in Sustainable Development planning. Today a 'reinvented government' program, soviet style, has invaded every county in America with councils to implement its new systems of government, justice and economics.

  Yes, Lay should be presumed innocent of, especially trumped up, federal criminal charges. But his complicity as an insider to the tyranny behind this global governance conspiracy ought not to be forgotten.

  I continue to be struck by the potency of an Austrian economist's response when I asked a speaker at a 2002 Mises event (not Steven Yates) whether the speaker thought terrorism or Sustainable Development posed the greater threat to the American economy. His response was unwavering: "Sustainable Development".

  (Today, I'm not sure that war, terrorism and Sustainable Development, are not a product of the same coordinated set of ideas.)

  America is in need of a new partnership between the smart and the brave.

  Aside from Yates, are any Austrian school professionals up to the challenge of being brave and not just smart? It is time that this bi-partisan Trojan horse becomes exposed!

  Michael Shaw, Abundance Ecologist
  www.LibertyGarden.com

  For more information see; www.freedom21SantaCruz.net
  Or sign up for ongoing news and information at www.AdvanceBulletin.net

  Published: August 16, 2004 11:30 PM

• Anonymous Coward

  NJ Potts: Why does your definition of "honest juror" mean (or so it appears) "willing to convict"? The court may try to tell you that you have to do that, but that's just another of their lies -- your only duty as a juror is to find what you think is right: if the law is wrong, vote to acquit. (Though people have been rejected for jury service in the past, and even whole juries sent out and a new one chosen, due to one or more jurors being informed that they have the right to do that. Long ago, in England, a jury was even jailed and mistreated for refusing to convict a man who broke a bad law (try to find 12 people...or even 2 people...today who'd go to jail rather than convict a man they thought had done nothing wrong! /There/'s an honest jury!), but they were eventually released and that case is the basis of the right of "nullification" in the US today. The man they refused to convict was William Penn, founder of Pennsylvania)

  Published: August 17, 2004 6:11 AM

• Francisco Torres

  "The message is that right and wrong are unscientific judgments; that there is no such thing as God or personal morality; that the only criterion, called validity, is whether you get whatt you want with the actions you select; and that the end justifies the means."

  That is ridiculous. You are assuming Mr. Lay was even taught that way. How do you know he is not a practicing Christian? How do you know he did not go to Christian schools all his life and was simply a casualty of bad luck and goverment intervensionism?

  I DON'T BELIEVE there is a God and I DON'T think I need to believe in such a powerful busybody to make good, moral decisions. I can make such decisions by myself, thank you very much, God or other fantastic notions notwithstanding.

  Just how do you explain Mr. G W Bush's utterly immoral and corrupt acts against other human beings? Is he not practicing the most insidious form of political expediency, yet at the same time being a Christian himself, and a believer in a powerful God?

  I am sorry, but I take issue on the notion that you need a God to make rational and good moral decisions. It has been MY experience that God-fearful people do make tragic and nonsensical decisions and then simply repent at church. I on the other hand prefer to take the consequences of my acts like a man.

  Published: August 17, 2004 9:16 AM

• Doug Smith

  I watched an Enron commercial on TV several years ago and remarked to my wife that I could not tell what Enron actually did. When I learned a little more about the company, that it was essentially a middleman in energy sales, I predicted (to my long-suffering wife) that the company would eventually fail.

  In a free market, producers and consumers seek constantly to lower their transaction costs. Middlemen spring up in the nascent stages of an industry and then find themselves increasingly unable to justify their fees as the industry evolves.

  Now, this was clear to dumb ol' me for years. Any Enron shareholder or employee who didn't see this coming just needs to take their lumps.

  That having been said, I am convinced corporations, which owe their existence solely to government, present a moral hazard.

  Published: August 17, 2004 6:33 PM

• Caley McKibbin

  Michael Shaw's angle is very interesting. However, as significant as that is to the perception of him, it has no relation to the case.

  Published: August 21, 2004 1:51 PM

• RJ

  Ken Lay was a corrupt liar and was properly convicted.

  Published: July 5, 2006 9:50 AM