Until his indictment by a grand jury in Houston on July 7, 2004, Kenneth
Lay had risen to fame and fortune more spectacularly than most corporate
leaders in America. He grew up in a struggling Baptist preacher’s
family in Tyrone, Missouri. At age 23, Exxon Corporation hired him
as an economist. At 30, he rose to undersecretary for energy issues
in the Interior Department. Four years later, he advanced to the presidency
of Florida Gas.
When Lay became chief executive officer of Houston Natural Gas in 1984 and merged
the company with InterNorth to create the promising Enron Corporation, he naturally
began hobnobbing with other Texas oil and gas entrepreneurs, such as Bush senior
and Bush junior, both men with high-flying political ambitions.
In the wake of the First Gulf War, cabinet secretaries James Baker and Robert
Mosbacher helped Enron gain government contracts. When they left the administration,
Lay rewarded them with Enron positions.
When George Walker Bush ran for governor of Texas in 1994, Lay considered him
a winner who would be good for Enron. By 1999, the company claimed annual revenues
of $100 billion while Lay had become one of America’s best paid CEOs with
a compensation package of a cool $42.4 million. It so happened that in the same
year, Governor Bush signed a law deregulating Texas’ electric energy markets.
Subsequently, an intensive personal correspondence ensued between Lay and Bush
who is said to have often referred to his new friend as “Kenny Boy.”
As a Bush “Pioneer,” Lay gave $651,760 to Republicans and placed
his personal Enron jet at the disposal of both Bush and Cheney. In turn, he was
invited to serve on the Bush-Cheney Transition Advisory Committee and seemed
to enjoy an open door at the White House. For the Florida recount fight, Lay
kicked in $5000. He and other Enronites also chipped in $300,000 to underwrite
the Bush-Cheney inauguration activities in January 2001.
Little apparently did Mr. Bush know then that from 1996 on Enron’s chief
financial officer, Andrew Fastow, used various accounting gimmicks to hide the
corporation’s debt, inflate its profits, and prop up its stock price. By
March 2000, CEO Ken Lay himself began signing fraudulent letters to Arthur Andersen,
Enron’s accounting firm, and fraudulent 10-Ks, the public disclosures required
of publicly traded corporations. By November, Lay began selling his Enron shares.
In February 2001, Fortune Magazine named Enron the “most innovative company
in America” for the sixth straight time while the Enron board gave its
executives million dollar bonuses. Yet, soon thereafter its directors also started
shedding Enron shares.
From February to August 2001, Vice President Cheney met at least four times with
Lay and other Enron officials to seek their advice for the report of his energy
task force. One has to wonder when and what the White House knew about the massive
fraud being perpetrated by Enron executives on the investing public and particularly
on its own shareholders and employees.
Surely this columnist knew the facts when, on January 6, 2002, he offered a detailed
assessment of “Enron’s house of cards” in Jacksonville’s
Journal-Courier. Three days later, the U.S. Justice Department reported that
it had begun a criminal investigation into Enron’s bankruptcy.
Since then, it took 4 1/2 years until, on May 25, Lay was convicted of one count
of conspiracy and five counts of fraud. He could face 20 to 30 years behind bars.
Although that seems harsh, his wrongdoing did ruin the finances of tens of thousands
of investors and thousands of employees.
In spite of numerous appeals through numerous channels for some kind of federal
bail-out, Kenny Boy’s numerous friends in the Bush administration and in
Congress did not help Enron--and probably should not have done so under any circumstances.
Ironically, he now will serve the White House best when he can be forgotten behind
the doors of a Big House.