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EDITIONS
Tuesday, 12 February, 2002, 23:31 GMT
Silent Enron boss faces Congress anger
Kenneth Lay is sworn in before the Congress hearing
Mr Lay's appearance has been keenly awaited
Kenneth Lay, the former chairman and chief executive of collapsed energy trader Enron, has made his long-awaited appearance before a Congressional investigative committee.

I am deeply troubled about [refusing to testify]... It may be perceived by some that I have something to hide

Kenneth Lay
Mr Lay made his appearance just hours before Enron announced Lord Wakeham and five other board members would resign.

As expected, Mr Lay refused to testify, claiming his constitutional right not to incriminate himself, and seemingly unmoved by sometimes aggressive criticism from senators.

In a brief statement, he expressed his sadness at the impact of the firm's collapse on staff and shareholders.

"I came here today with a profound sadness about what happened to Enron, its employees, retirees, shareholders and other stakeholders," he said.

Mr Lay insisted that he wanted to respond to senators' questions, but had been instructed by his lawyers that it would be rash to overlook his right to silence.

"I am deeply troubled about asserting these rights," Mr Lay said.

"It may be perceived by some that I have something to hide."

Senators' anger

Mr Lay's decision not to be questioned was widely advertised in advance, but nonetheless disappointed the members of the Senate Commerce Committee, which is conducting one of many probes into the company's failure.


As CEO of Enron, you held out your company to the public as a serious and wise investment... It's now time to answer to the public

Senator Max Cleland

"Mr Lay, I regret that you have chosen not to explain... how you, and others in senior management and on the board of Enron, apparently failed so completely to fulfill your responsibilities," said Senator John McCain.

In opening statements, several of the senators accused Mr Lay of running a sham company, and referred to the anger felt at the substantial financial losses suffered by investors and employees.

As CEO of Enron, you held out your company to the public as a serious and wise investment," said Senator Max Cleland.

"It's now time to answer to the public."

Barbara Boxer, senator for California, highlighted the impact on her state, where energy deregulation resulted in a severe power crisis last year.

"My state was bled dry," she said.

"What you did... was without conscience."

Management slammed

Earlier, in written testimony to the committee, William Powers, chairman of a special investigative committee, blamed Mr Lay and other managers for Enron's failure.

William Powers
Mr Powers: Unearthed systematic management failure

"There was a fundamental default of leadership and management," Mr Powers said.

"We found a systematic and pervasive attempt by Enron's management to misrepresent the company's financial condition."

Mr Powers, dean of University of Texas Law School, has been in charge of an investigation into Enron for the past three months.

Two weeks ago, Mr Powers testified before another committee that senior Enron executives had enriched themselves "by tens of millions of dollars that they should never have received."

More resignations

In a Securities and Exchange Commission filing Enron said six board members would resign effective in 30 days.

Others leaving include Ronnie Chan, John Duncan, and Robert Jaedicke - three of the longest serving members on the board - as well as Charles LeMaistre and Paulo Ferraz Pereira.

Enron said it would cut its board size from 17 members to eight and search for a non-executive chairman and other candidates to join the board to help in the restructuring process of the bankrupt company.

Probes pick up speed

Mr Lay is the most high-profile participant to have appeared before Congress so far, and becomes the sixth to claim the right to silence.

Those who have agreed to testify include Jeff Skilling, another former Enron chief executive, and Joseph Berardino, chief executive of Andersen, the energy trader's auditors.

Congressional investigations into Enron are gathering pace, having begun in earnest a week ago.

Committees and sub-committees in both the Senate and House of Representatives are pursuing different aspects of Enron's collapse, the biggest bankruptcy in US history.

The event is also being probed by regulators and law-enforcement officials, and most participants have been wary of prejudicing these investigations by speaking before Congress.

Mr Lay is no stranger to Capitol Hill, having enjoyed particularly close relations with the current Republican administration.

He is scheduled to appear on Thursday before the Financial Services subcommittee on capital markets.

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Former Enron chairman Kenneth Lay
"I have been instructed by my counsel not to testify"

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12 Feb 02 | Business
11 Feb 02 | Business
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07 Feb 02 | Business
05 Feb 02 | Americas
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