Reply #20: About Ken Lay.... [View All]

[SophieZ]

Michael Kelly, in Z magazine online, wrote:
"Listen, people. Our titans of industry are the best darned titans of industry in the world, and they deserve anything they can get, with both hands. It is not their fault that they turned out to be the greediest bunch of no-talent morons the world has seen since the Harding administration. It could have happened to anyone. Let them have their money - oh, sorry, I meant our money."

"The remarkable thing here is the scale: It's not just one dog they were hiding; it's a whole kennel." Carole Broderick, a Philadelphia plaintiffs' lawyer, quoted wrote right after the bankruptcy, in BLOOMBERG NEWS

THE TIME ZONE DEFENSE
When a reporter asked how it was possible for the chief executive of
Enron to be so out of touch, Ken Lay's attorney Mike Ramsey said it was a matter of the company's size and structure. "I don't think you understand the way Enron is set up," Ramsey said. "I don't think you understand how many time zones it operates in, how many people there are and how criminals keep things secret from administration. If you come to understand that, I think you'll understand the whole situation we're in."
---"Lay knew nothing about Enron deals, lawyer says," Reuters, Wednesday August 21, 2002,
http://in.news.yahoo.com/020821/137/1u465.html

Two years later, almost to the day, Secretary of Defense Donald Rumsfeld would try the same defense. He claimed that there was no way that he and other top military officials could have known about the abuse and torture that took place at Abu Ghraib and other prisons. Rumsfeld said, "if you are in Washington, D.C., you can't know what's going on in the midnight shift in one of those many prisons around the world." -- "Rumsfeld: No plans to resign," Arizona Daily Star, 8/27/04, http://daily.misleader.org/ctt.asp?u=1309142&l=52355. quoted by MoveOn Daily Misleader


On August 14, 2001 Skilling resigned as Enron CEO; Lay writes an email message to his employee/stockholders: "Our performance has never been stronger; our business model has never been more robust. ...We have the finest organization in American business today."


On Aug. 20, 2001 - Ken Lay, in an interview with Business Week, says, "There are absolutely no problems that had anything to do with Jeff's departure. There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem issues. The company is probably in the strongest and best shape that it has ever been in. There are no surprises. . . . There is no other shoe to fall."

On August 21, Lay begins his second flurry of sales on Form 5, which will not be reported until the following February (well after bankruptcy is declared):

August 21 he sells 110,706 shares @ $36.25
August 23 108,254 @ $36.95
August 24 110,041 @$36.35
August 30 112,706 @$35.50
Sept. 4 114,346 @$35.00

Over fifteen days, he sells over half a million shares (556,053) raising $20 million.

October 23, 2001 Lay reassures investors and employees, just as he begins four days of selling stock for $6 million


The month following Enron's bankruptcy (in January 2002), Ken Lay sends his wife to appear on the Today show. It's also a few days after Cliff Baxter's death.

Ken Lay's wife says,
"Everything we own is for sale" in an effort to stave off personal bankruptcy. "By anyone's standards, it was a massive amount of money," Linda Lay said, "and it's gone. It's gone. There's nothing left. Everything we had mostly was in Enron stock." "We're fighting for liquidity," she said. "We, we don't want to go bankrupt."

Lay had taken out more than $300 million in Enron compensation and salary the past four years. One bonus alone was over $10 million. Included in that, he sold $175 million in Enron stock over the years 1999, 2000 and 2001.

How broke were they? I spent two weeks gathering information on their public holdings. Was it their $37 million of real estate holdings in Houston, Galveston and Aspen? Their nearly $11 million in stocks (minimum)? Had Ken Lay lost (somewhere, we know not where) the entire $175 million he got from stock sales? Had he lost the entire $300 million he got in stock and other compensation?

If you just look at his base pay at Enron, in one year, it was $1.3 million. The average American household earns $42,151 per year. That means the average household would take over 30 years to earn that much. WHO HAS THE LIQUIDITY CRISIS HERE?

When it became clear Lay would be indicted, he began a PR offensive. One of his stable of lawyers, again, Mike Ramsey, wrote in the Houston Chronicle:

MIKE RAMSAY -- Nov. 26, 2004:
"Indeed, after Ken's return as CEO in August 2001 they held all their shares as the market plunged from near $40 per share to near $0.
The only shares that Ken and Linda ever sold during that tragic three and one-half months were sold to prevent margin calls from triggering a forced sale of all their shares. They never voluntarily sold a dime's worth after Ken's return. In fact, at bankruptcy they still held more than 1 million shares and more than 4 million vested stock options. As a result, the Lays lost 95 percent of their wealth, which had been accumulated over a 35-year business career."

Cry me a river. This is blatantly misleading.