Enron's Lay to seek 5th's protection

Feb. 11, 2002 at 2:18 PM   |   0 comments

WASHINGTON, Feb. 11 (UPI) -- Former Enron Corp. Chairman Kenneth Lay will seek the constitutional protection against self-incrimination during testimony this week before a Senate committee.

Lay, who headed Enron when it declared the biggest bankruptcy in U.S. business history, was subpoenaed to appear Tuesday before the Senate Commerce, Science and Transportation Committee. He had declined previous requests for his testimony but the committee issued the order for his appearance last Tuesday.

On Sunday his spokeswoman, Kelly Kimberley, said, "Under instruction of counsel, he has decided to plead the Fifth Tuesday." The Fifth Amendment allows people to refuse to testify against themselves.

Several former Enron executives appeared before the committee last week and most claimed Fifth Amendment protection. One who didn't, however, was another former Enron Chief Executive Officer Jeffrey Skilling. However that decision could be costly since Sunday two U.S. representatives said Skilling's assertion that he was unaware of partnerships run by Enron's chief financial officer that were used to provide an inaccurate view of the company's profits. Some have said those comments could be considered perjury.

On CBS' "Face the Nation," Rep. Bill Tauzin, R-La., said: "All the information we got was that he really thought he was smarter than everybody in Washington that he could come and just ... tell us anything he wanted and we would buy it. I'm afraid he may have put himself in some legal jeopardy as a result."

Skilling unexpectedly resigned as chief executive of Enron in August after pocketing an estimated $67 million from selling company stock.

"I didn't believe the company was in any imminent financial peril," Skilling said in last week's testimony.

"We believed fiercely in what we were doing. I am devastated by and apologetic about what Enron has come to represent."

A key focus of the hearings was why Skilling did not take action after Jeffrey McMahon, then Enron's treasurer, approached him in March 2000 with concerns about the company's dealings with the complex, off-the-books LJM partnerships.

"It was my understanding that the purpose of the transactions was to provide a real hedge," said Skilling of using these partnership deals to lock in profits from technology investments.

"I was not aware of any financing arrangements designed to conceal liabilities or inflate profitability," he said.

In earlier testimony Thursday, McMahon -- now Enron's president and chief operating officer -- told the congressional panel he had met with Skilling nearly two years ago to report the situation with a series of complex partnerships that eventually led to Enron's downfall was a becoming a problem.

Last week's appearances marked the first time since Enron's collapse that past and current company executives presented themselves to a congressional panel. While many of those called arrived in answer to a subpoena, Skilling's testimony was voluntary.

More than 10 congressional investigations, inquiries are under way by the Securities and Exchange Commission and the Labor Department. The Justice Department has opened a criminal investigation.

Enron filed for Chapter 11 protection Dec. 2 in the nation's largest bankruptcy, putting more than 4,000 of its employees out on the street. The workers lost thousands of dollars of savings in the company's 401(k) retirement plan.

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