Skip to comments.(Enron) Wife: Lay did no wrong but couldn't stop crash
Posted on 01/30/2002 3:00:25 AM PST by rw4site
The wife of former Enron Chairman Ken Lay said he would have acted to fix the company's problems if he hadn't been kept in the dark by accountants from Arthur Andersen and outside legal counsel.
"There's some things that weren't -- that he wasn't told," Linda Lay said during an interview aired on NBC's Today show Monday. "There's some things that the board of directors weren't -- didn't know. But that will come out in the investigation."
During the interview, Lay described her and her husband's attempt to stave off personal bankruptcy, defended her husband's integrity and said he believes Enron can recover.
The Lays declined to be interviewed by the Chronicle. A public relations firm representing the family said Linda Lay and her children would do no more interviews for the time being.
She said she understands why her husband is the focal point of many people's anger.
"He is at the top. That's where it ought to be," Lay said. "If I were back there listening to all the things that were being said, I would absolutely have to say that: `What is wrong here? How can all of this be happening without something -- someone doing something terribly evil?' "
She praised Sherron Watkins, Enron vice president of corporate development, for sending her husband a memo Aug. 15 and later meeting with him to discuss her concerns about the company's practice of hiding losses in off-the-book accounts.
"He had their, their outside counsel (Vinson & Elkins law firm) come in and the accounting firm look at it," Lay said, "and they came back and told him it was fine."
Asked if her husband, who resigned as Enron's chairman last week, felt let down by accountants and lawyers, she replied, "Absolutely. Absolutely. Never, never, not for one second would he have allowed anything to go on that was illegal. If those people had come back to him and told him there was something wrong, he would have stopped and fixed it."
Days after receiving Watkins' memo, Ken Lay exercised options on more than 92,000 shares of Enron stock but did not sell it. That effectively repaid a $2 million loan from the company.
A month after Watkins warned about looming financial scandal, Lay told employees in an e-mail session that the company was sound and urged them to buy stock. Less than three weeks later, the company reported a third-quarter loss of $618 million and and a $1.2 billion reduction in shareholder equity.
"My husband tells the truth," Linda Lay said. "He's not a liar. He totally, 100 percent believed in it. He believed it would be OK."
She said "everything we own is for sale" in an effort to stave off personal bankruptcy, even though her husband earned more than $300 million in compensation and salary the past four years.
"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."
The Lays did not diversify their investments much, including their 401(k), she said.
"Why wouldn't I put it in Enron? Why wouldn't I?" she said. "My husband was Enron. He believed in it."
The Lays own substantial property. In Harris and Galveston counties and Aspen, Colo., they have homes and properties worth at least $27 million.
Three of their four Aspen properties were up for sale earlier this month: a 4,500-square-foot home listed at $6.8 million; a 4,500-square-foot riverfront home listed at $6.5 million; and a 20,000-square-foot vacant lot listed at $2.9 million.
Their Houston home, a 12,800-square-foot condominium in the Huntingdon luxury high-rise, has five bedrooms and 6 1/2 baths. It has an assessed market value of $7.1 million.
They own jointly or separately at least 13 homes and apartment homes in Harris and Galveston counties. Those include a home on Avalon Place assessed at $742,000, a home on Sul Ross Street assessed at $320,000 and a home in Galveston assessed at $790,000.
"We're fighting for liquidity," she said. "We, we don't want to go bankrupt. And we've had long-term investments, and those long-term investments have cash calls. Other than the home we live in, everything we own is for sale."
She began crying when she recounted a conversation with her husband after he realized bankruptcy was inevitable.
"He was very emotional about it," she said. "He said he just didn't think he could stop it. He said he tried everything, everything he could think of, and he couldn't stop it."
She said she and her husband were devastated by the suicide of former Enron Vice Chairman Cliff Baxter on Friday.
"My husband has spoken to him not too long ago, and Cliff is a, a -- was a wonderful man."
Most analysts say Enron -- under investigation by the Justice Department for possible criminal wrongdoing and by 11 congressional committees -- has no chance of avoiding liquidation. But Lay says her husband remains optimistic that the company can emerge from Chapter 11 bankruptcy protection to become profitable again.
Consultants who specialize in corporate and political damage control were divided on whether Lay's interview will help her husband's cause.
Ken Fairchild, principal owner of Fairchild Consulting in Dallas, said the Lays should tell their side of the story since there has been so much negative coverage of Ken Lay's role in Enron's collapse. Ken Lay's lawyers have advised him not to do interviews.
Ken Lay would have been grilled by an interviewer, but Linda Lay got much easier questions because she is his wife and claims to be a victim as well because her own retirement has evaporated, said Fairchild, author of Sunday Showdowns with 60 Minutes, an account of how he prepared more than 30 corporate executives for appearances on the news show.
"Obviously, it was a good move," said Fairchild. "It doesn't work unless the person really believes what she is saying. They have to believe they are telling the truth, and they have to look like they are telling the truth. And that certainly sounds like the case here."
But Houston political consultant Allen Blakemore said there is little to be gained by calling on your wife to defend your integrity.
"She's being trotted out to make an appeal to people's emotions," Blakemore said. "Should we go ask his mother if he cleaned up his room or picked up his bath towel? None of this stuff is relevant."
Gloria Alvarez, who was laid off from her job as senior administrative assistant for Enron Global Strategic Sourcing, said Linda Lay's interview was predictable.
"She's the wife of the CEO," Alvarez said. "Of course she's going to defend her husband, as any wife would."
Nathan Childs, who was laid off from Enron's information technology hardware department, is living in a trailer on his parents' property in Kempner.
"I can't cry for the Lays right now. They have a home to go to every night," Childs said. "It doesn't matter what she says; Ken Lay's got more than ex-Enron employees."
Chronicle reporter Kristen Mack contributed to this story.HoustonChronicle.com -- http://www.HoustonChronicle.com | Section: Page 1
This article is: http://www.chron.com/cs/CDA/story.hts/page1/1229405
The Jan. 29 Page One Chronicle article, "The fall of Enron; Wife: Lay did no wrong but couldn't stop crash," quoting [former Enron chief Kenneth Lay's wife] Linda Lay, was a refreshing bit of news with a touch of comedy. Either Lay is in deep denial or she's a match for her husband.
If Ken Lay didn't know what was going on in his company, he shouldn't have been masquerading as a chief executive officer. She must be banking on it not being criminal to be stupid.
I have no tears to shed for her. It would be funny if not devastating to so many.
Deanna Scott-Simmons, Houston
Linda Lay has a right to her opinion, but she is looking in the wrong place if she expects sympathy from Houstonians. I'm sure most laid-off former Enron employees wish they had $30 million in assets to put up for sale while crying about "everything being gone."
Robin Lewis, Spring
Linda Lay says [she and her husband, Ken] have lost everything except their home. Their $7 million penthouse apartment or the 11 other homes they own?
Enron has ex-employees who have lost their only home, have no medical insurance and don't know how they are going to feed their families. Cry for them, Linda, not for yourself.
A.M. Shelton, Houston
Linda Lay apparently has been fooled by her husband and will have to struggle through her senior years in her $7 million condo. Spare me.
Raymond P. Ruiz, Houston
When reading the article on Ken Lay's wife, Linda, I thought about how many times I've heard that story before. A kid gets caught red-handed by the police and the mother says, "My son is a good boy, he just got into trouble because he was running with a bad crowd."
If what she said is true, Ken Lay was no better at managing his personal finances than managing his company's. Hundreds of millions a year and can't make ends meet.
Wilmer Allman, Freeport
I see where the Lays [former Enron leader, Ken and wife, Linda] are down to their last $100 million or so. What a pity.
Rich Lasher, Katy
Ken and Linda Lay need a new public relations firm -- one that discourages personal interviews. No one believes they are destitute.
R.A. Smith, Houston
It has been quite a while since I have read such self-serving pap as Linda Lay's sob story about the state of their finances. If Ken Lay is such a victim in this whole debacle, why did he ignore the warnings he got from several sources, while continuing to enrich himself through his stock sales as the company came crashing down around him?
Wayne Herbert, Houston