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Last Updated: Thursday, 8 July 2004, 19:24 GMT 20:24 UK
Enron ex-boss pleads 'not guilty'
Enron ex-chairman Ken Lay
Laying the blame: Enron's ex-chairman says it was the finance chief's doings
Enron ex-chairman Kenneth Lay has pleaded "not guilty" to 11 criminal charges over the collapse of the former US energy giant.

The charges against Mr Lay include bank fraud, share trading fraud and making false statements.

Prosecutors led Mr Lay to court in handcuffs after he kept an agreement to turn himself in to the FBI in Houston.

If convicted of all counts, Mr Lay could face up to 175 years in jail and fines totalling $5.75m (3.10m).

Bail was set at $500,000 by US magistrate Judge Mary Milloy, rejecting a request from prosecutors to post bail at $6m on the contention that Mr Lay is a flight risk.

'Devastating harm'

In a separate action, the Securities and Exchange Commission charged Mr Lay with securities fraud and insider trading, seeking to recover $90 million in unlawful proceeds from stock sales.

"Kenneth Lay is charged with abusing his powerful position....and repeatedly lying in an effort to cover up the financial collapse that caused devastating harm to millions of Americans," said US Assistant Attorney General Christopher Wray during a press briefing at the Justice Department.

Kenneth Lay and other senior Enron officials "engaged in a wide-ranging scheme to deceive the investing public," the government charged.

Mr Lay's lawyer, Michael Ramsey, told reporters that his client was innocent.

Mr Ramsey said former chief financial officer Andrew Fastow and other top officials at Enron "were not telling the boss that they were stealing from Enron."

In a televised news conference from a Houston hotel, Kenneth Lay said: "I firmly reject any notion that I have engaged in wrongful or criminal activity."

"I want a speedy trial," he said. " I hope it will begin by early September this year.

"As chair and CEO of Enron when it collapsed, I feel it is my duty and obligation to go to trial as soon as possible."

Political fallout

Enron's collapse shook corporate America to the core, and resulted in reforms to company law.

LAY: THE 11 CHARGES
One count of conspiracy to commit securities and wire fraud
Two counts of wire fraud in connection with false and misleading statements in employee meetings
Four counts of securities fraud
One count of bank fraud
Three counts of false statements to banks

The case has political significance since Mr Lay and President George W Bush are known to be close friends.

The BBC's North America business correspondent Stephen Evans says bringing the businessman - a former Republican fundraiser - to court resurrects an issue that is unhelpful to the Republicans in election year.

Mr Lay has previously complained that his close friendship with fellow Texan millionaire Mr Bush, who is said to call him "Kenny Boy", would encourage prosecutors to charge him rather than face criticisms of a political cover-up.

Responsibility issues

Enron went bankrupt in December 2001 after it emerged that the company had concealed millions of dollars in debts.

Enron ex-chairman Kenneth Lay
Mr Lay poured substantial sums into Mr Bush's campaigns in what appeared to be a relentless quest for political influence

Chief financial officer Andrew Fastow had devised complex partnerships to hide the true state of affairs from investors. He pleaded guilty and accepted a 10-year prison sentence.

The question now is how much Mr Lay, a former federal energy regulator who holds a doctorate in economics, knew about the false accounting.

Mr Lay has always said he was not aware of the accounting tricks used to disguise Enron's true position.

However, it is clear that he was warned about them by middle-managers, including the whistle blower Sherron Watkins.

She wrote to him detailing her concerns about accounting ploys that artificially bolstered Enron's profits in 1999 and 2000.

Mr Lay has said she impressed him as "very credible, very smart" but that her letter did not convince him to take action.

Confessions

In light of the Enron scandal, US lawmakers passed the Sarbanes-Oxley act, compelling chief executives to submit a pledge that they fully understand and take responsibility for their firm's accounts.

ENRON'S FALL
Oct 01 Accounts black hole becomes public knowledge
Dec 01 Enron admits inflating profit, files for bankruptcy
Emerges firm used complex web of transactions to hide debt
2002 Criminal inquiry launched
Jan 04 Ex-finance chief Fastow pleads guilty, accepts 10-year jail term
Feb 04 Ex-chief Skilling pleads not guilty to fraud and insider trading charges
Jul 04 Ex-chairman Lay indicted

The Enron affair prompted a wave of confessions among other firms such as Worldcom which subsequently admitted to falsifying accounts.

It also led to the collapse of Andersen, once one of the world's largest and most prestigious auditors, which had approved Enron's accounts.

Mr Lay has also been heavily criticised for selling his own Enron shares while encouraging his staff to hold on to theirs. Staff were left holding worthless stock options and pension plans when Enron went bust.




BBC NEWS: VIDEO AND AUDIO
The BBC's Matt Frei
"The entire top brass of the energy giant are now in court or facing jail"



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