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Ex-Enron chief says he never noticed collapse

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Three months after Kenneth Lay, Enron’s former chairman and chief executive, went on trial for fraud and conspiracy, he took the witness stand to make his own defence to the 16 jurors who will decide his fate.

After a few minutes on the stand Mr Lay seemed as at home as he once did on the top floor of the Enron building.

He sprinkled his testimony with light jokes and acted as if he was at a social event, surrounded by family, at one point asking his wife, Linda, if he was correct with a personal detail.

Jurors seemed warmer to Mr Lay than they had to Jeffrey Skilling, his co-defendant, who led Enron for six months. They looked directly at him, a courtesy they initially denied Mr Skilling.

The defence that began to take shape from Mr Lay’s testimony was that he was an optimist who believed strongly in Enron’s prospects, who hired smart people and let them do their jobs as they saw fit.

The implication was that he would not have committed the crimes with which he has been charged. He also implied that he had promoted the company’s prospects because he believed them. And he said that he only focused on the bigger picture – claiming that the minor details, which might have hinted that fraud was taking place at Enron, would have escaped him.

Mr Lay and Mr Skilling are charged with lying to the public about the state of Enron’s finances. They insist Enron was a strong company sent into bankruptcy in 2001 by a “run on a bank” and the only fraud at Enron was committed by Andrew Fastow, its former chief financial officer, who has pleaded guilty.

In an attempt by the defence to make Mr Lay a likeable character, jurors were told that he grew up the son of a preacher who was so poor that by the age of 12 Mr Lay began doing full-time farm work in the summers.

The court also heard that he had worked part-time throughout college, and obtained his PhD in economics at night, while working full-time by day.

The 64-year-old father of five and grandfather of 12 described himself as a self-made man, who had a stint in the Navy, six years of work for the federal government and a climb up the corporate ladder that culminated with a merger that created Enron.

One of the biggest rewards of his success, he said, was that he helped so many people financially – highlighting his former role as one of Houston’s top charity donors.

He said he was an optimist, while trying to defend the positive comments he had made about Enron prior to its collapse. “Most leaders are optimistic; most people don’t like to follow pessimistic leaders,” he said.

Mr Lay said he pursued the “best talent” and gave them “a lot of running room” to manage their work and people as they saw fit. “I’m very much of a decentralised person,” he added. He said he preferred to focus on the big picture, though he would not hesitate to jump in to help or correct something as needed.

Mr Skilling, on the other hand, he said “really gets into the details”, which made them a good team.

In addition, Enron had numerous internal and external accountants and lawyers who poured over its books and would have signalled if there was something wrong.

Mr Lay’s charges relate to when he resumed the CEO position, after Mr Skilling’s abrupt 2001 departure. “The last thing I would do is step back in as CEO and pick up a conspiracy,”he said.

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