May 3, 2006
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Lay Defends By GARY
MCWILLIAMS and JOHN R. EMSHWILLER
May 3, 2006; Page C4 HOUSTON -- On former Enron Corp. Chairman Kenneth Lay1's sixth and last day of testimony, he argued as he had from the outset that the prosecution misconstrued routine business practices and that all his decisions were approved by advisers. Under questioning by his defense attorney, Mr. Lay struck at the government's claim that in the fall of 2001 he stopped providing investors with a retail energy unit's contract signings to hide a slowdown in the business. The prosecution contends the move came as the retail unit was about to miss a $30 billion target for the year's signings. At the time, Mr. Lay told investors that the business was meeting its targets. WALL STREET JOURNAL VIDEO
![[CNBC video]](Enron Lay Defends Practices WSJ 050306_files/it_cnbc-video09142004171604.gif){kind=small} 2
Does
Lay regret3 having spent so lavishly as Hueston revealed in
court during cross-examination? CNBC's Scott Cohen catches up with Lay
outside the courthouse Tuesday morning. Mr. Lay called the government's characterization of the reporting change a "complete distortion." The defense played a tape recording of the unit's former head telling employees in early June 2001 that he planned to "move away" from the contract-signings measure and switch to growth and profitability measures. Mr. Lay also argued that online customer signups might have allowed the unit to meet its goal for the year. ![[Kenneth Lay]](Enron Lay Defends Practices WSJ 050306_files/HC-GG043_Lay_20060329125215.gif)
Mr. Lay and former Enron President Jeffrey Skilling4 are on trial here on criminal conspiracy and fraud charges in connection with the Houston energy company's December 2001 collapse. Late in the day, a defense accounting expert testified that Mr. Lay's descriptions of losses and a $1 billion equity write-down in the 2001 third quarter were appropriate based on accounting rules. Jerry Arnold, an accounting professor at the University of Southern California, said the testimony by government witnesses that the company was hiding losses and should have taken write-downs was incorrect or incomplete. The company he works for has been paid $1 million for its trial preparation and testimony, he said. LAW BLOG
![[Icon]](Enron Lay Defends Practices WSJ 050306_files/it_scale09142004171604.gif){kind=small} • Desperate
(Houston) Housewives5• Get updates on legal news throughout the day at the Online Journal's Law Blog6. The defense also sought to lessen the impact of the prosecution's portrayal of Mr. Lay as uncaring and dishonest. In 2001, Mr. Lay sold $70 million in Enron shares back to the company but failed to disclose the transactions even as he was telling employees that he was a buyer of the stock. The prosecution hit hard at the Enron sales, noting that Mr. Lay retained tens of millions of dollars in other investments while selling Enron shares. Mr. Lay testified that he sold $13 million in non-Enron investments in 2001 in addition to his Enron stock sales. The non-Enron sales were larger proportionally than their place in his portfolio, he said. On the Enron stock sales, Mr. Lay has testified that he followed Securities and Exchange Commission rules that such transactions don't have to be reported until the year after they are made. Write to Gary McWilliams at gary.mcwilliams@wsj.com29 and John R. Emshwiller at john.emshwiller@wsj.com30 | ||||||
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