In a letter to the Senate Commerce Committee, Lay's lawyer Earl Silbert apologized for Lay but said his client could not "be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard."
Politicians in recent days have charged that fraud and corrupton at Enron lead to its downfall. Silbert said in the letter that he advised Lay not to testify.
In return, politicians cancelled two panels previously scheduled for Monday to hear Lay's testimony, a statement from the Senate Committee on Commerce, Science and Transportation said.
Lay, 59, resigned Jan. 23, following Enron Corp.'s filing for the country's biggest-ever bankruptcy on Dec. 2. Enron's meltdown destroyed pension funds of thousands of employees and sent the company's stock price tumbling.
At the same time, Enron's accounting firm Arther Andersen Sunday said it has hired former Federal Reserve Chairman Paul Volcker to help it make changes in operational practices.
Volcker will head an independent oversight board that will make "fundamental changes" in the company's audting practices, Joseph F. Berardino, managing partner and chief executive officer of Andersen Worldwide said in a statement. Andersen has come under congressional and regulatory scrutiny following Enron's collapse.
Volcker said in a statement one of his concerns has been the "profession of auditing and accounting is in crisis. That crisis is now evident to everyone."
Andersen also said Sunday it would no longer accept assignments from publicly traded U.S. clients to design and implement financial information systems. The company also will "no longer accept engagements to provide internal audit services to publicly traded U.S. audit clients."
Lay and top executives have been blamed by investigators for reporting $1 billion in profits that did not exist. Executives nevertheless often enjoyed immense personal gain.
A massive report submitted to federal bankruptcy court Saturday night disclosed several previously unknown allegations, including accusations that Enron was aided in its long list of failures by its auditor, Andersen, which seemingly ignored auditing standards. Also, according to the report, lawyers appeared to fail their responsibilities.
Andersen reacted quickly to the report, authored by an outside director brought in by Enron to investigate, calling it an an attempt "to shift blame to others."
Enron's management mechanisms failed or never existed to begin with, the report said. It bestowed little benefit of the doubt on the many current and former Enron executives identified by name.