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Last Updated: Monday, 1 May 2006, 22:26 GMT 23:26 UK
Enron boss 'ignored staff fears'
Enron founder Ken Lay
Mr Lay has always denied the charges
Enron founder Kenneth Lay ignored staff concerns about accounting irregularity in the weeks before the firm collapsed in 2001, a Houston court has been told.

As Mr Lay returned to the witness box for a second week of testimony at his fraud trail, prosecutors produced staff emails which questioned its accounting.

Enron went bust in 2001 owing $32bn (18bn). Mr Lay is accused of hiding the problems to boost its share price.

Pleading not guilty, Mr Lay insisted that staff kept him out of the loop.

Anger

Mr Lay is facing six charges of conspiracy, and wire and securities fraud, and if found guilty he could spend up to 45 years in jail.

ENRON TIMELINE
1985 - Enron formed
October 2001 - Enron reports $638m third quarter loss and $1.2bn fall in shareholder equity
October 2001 - Securities and Exchange Commission begins inquiry into firm
November 2001 - Enron shares sink to 10 year lows as buyout deal falls through and further losses are revealed at the firm
December 2001 - Enron files for Chapter 11 bankruptcy
2002 - Criminal investigation of Enron launched
2004 - Skilling and Lay charged over Enron collapse. Former finance chief Andrew Fastow pleads guilty to criminal charges and agrees a 10 year jail term
January 2006 - Enron trial begins

He has been charged along with former Enron chief executive Jeffrey Skilling, who is himself facing 28 charges of conspiracy and fraud.

The chief financial officer of the company, Andrew Fastow, has pleaded guilty and has testified against his former bosses.

In one of the staff emails produced in court on Monday by chief prosecutor John Hueston, an employee says "I've lost all respect for Enron senior management".

When Mr Hueston went on to ask Mr Lay why he did not question Mr Fastow at the time about newspaper reports into unusual business practices at the firm, Mr Lay replied "I was getting information from all sides".

'American dream'

Under cross examination, Mr Lay also gave details of he and his wife's personal high spending back in 2001, despite the mounting financial woes at Enron.

"We had realized the American Dream and were living a very expensive lifestyle," Mr Lay told the court.

"It's the type of lifestyle that's difficult to turn on and off like a spigot [vent],"

Prosecutors allege that Mr Lay sold $70m in Enron shares back to the company in 2001 to pay for personal luxuries such as renting a yacht for a birthday party.

Mr Lay again seemed to lose his temper in the witness box during Monday's hearing.

Rakesh Khurana, a professor of organizational behaviour at Harvard Business School, believes Mr Lay's apparent anger is due to him being used to having his own way.

"This is a culture he's not used to, being aggressively questioned, and where his every utterance isn't seen as the ultimate truth," said Mr Khurana.


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