Feb. 4, 2002, 10:20PM
Lay steps down from Enron's board of directors
Irate lawmakers working on subpoenas
By JULIE MASON
Copyright 2002 Houston Chronicle Washington Bureau
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WASHINGTON -- Former Enron Corp. Chairman Ken Lay resigned from the company's board of directors Monday, as irate lawmakers prepared subpoenas that would force him to appear on Capitol Hill.
Lay, who resigned as chairman last month, severed final corporate ties with Enron, saying his problems had become a distraction to the company's efforts to emerge from bankruptcy.
"Due to the multiple inquiries and investigations, some of which are focused on me personally, I believe that my involvement has become a distraction to achieving this goal," Lay said in a statement.
The move came during a chaotic day in Washington as lawmakers, stung by Lay's abrupt cancellation of highly anticipated testimony on Capitol Hill, took steps to compel the embattled former executive to appear.
"I understand it would be difficult to come and testify, but he should not have expected it would ever be a walk in the park," said Sen. Byron Dorgan, D-N.D.
Lay withdrew less than 24 hours before he was to appear Monday at the Senate Commerce Committee. He also pulled out of a hearing set for today before the House Financial Services Committee.
In response, the House committee voted unanimously to authorize its chairman to subpoena Lay, and the Senate panel is poised to do the same today.
The Senate panel tentatively set Feb. 12 as the new day to hear from Lay, while the House committee's new date was undecided.
Lawmakers said they are not inclined to barter immunity for Lay's testimony, and it was unclear whether Lay would invoke his Fifth Amendment right against self-incrimination and refuse to answer questions.
Calls for comment Monday to attorneys for Lay and Enron were not returned.
Kelly Kimberly, Lay's newly hired spokeswoman, said Lay returned to Houston from Washington D.C., Monday morning.
Angered lawmakers, far from backing down from the heated rhetoric that Lay's attorneys blamed for his withdrawal, again lashed out at Enron and its former chairman for failing to appear as promised.
"We have not arrived at any preconceived notions here, but I will tell you it sure appears to me that this company was on the financial equivalent of steroids," said Sen. Ron Wyden, D-Ore. "They inflated those short-term profits and pumped themselves up to the detriment of the long-term health of thousands of families in my home state."
Sen. Ernest Hollings, D-S.C., chairman of the Senate committee, criticized the Bush administration for its ties to Enron and called for a special prosecutor to oversee the criminal investigation.
"I've never seen a better example of cash-and-carry government as this Bush administration and Enron,"
Hollings said.
Attorney General John Ashcroft recused himself from prosecuting the case, disclosing that he took campaign contributions from Enron for a failed 2000 Senate bid.
Hollings criticized the subsequent choice of Deputy Attorney General Larry Thompson to head up the investigation, noting that Thompson once worked in a law firm that represented Enron.
"In other words, it should be independent," Hollings said.
"Of course, finding someone in this town independent of Enron is easier than finding bin Laden, I can tell you that," he said ironically.
The Justice Department rejected the call to replace Thompson with a special prosecutor.
"No person involved in pursuing this investigation has any conflict, or any ties that would require a recusal," Justice Department officials said.
Lay, who it was hoped would finally break months of silence on the collapse of his one-time empire, was to be the star attraction in a week of intense hearings in both the House and Senate.
Instead, his lawyers cited "prosecutorial" tones in the public remarks of lawmakers preparing to question Lay, in explaining his withdrawal.
Committee members generally scoffed at Lay's response, noting that their adversarial tone has remained largely consistent since he agreed in December to testify.
"The problem for Mr. Lay is that some of the autopsies have already been done on Enron," said Sen. Peter Fitzgerald, R-Ill. "If Mr. Lay wants to correct some of the damning impressions that are coming out of these documents, he ought to come before the American people."
Lay's decision not to appear came the day after a special committee of Enron's board released a 218-page report criticizing company executives, auditors, lawyers and board members for allowing improperly created partnerships to inflate Enron's earnings, hide its debt and wrongfully enrich a handful of insiders.
The report also cited Lay for bearing significant responsibility in the company's collapse.
"I'm confident Mr. Lay thought it was going to be a whitewash," Hollings said. "And when he saw it wasn't a whitewash on Saturday, that's when he said, `Ah, I can't possibly testify now, because that there is a road map to indictment.' "
Lay resigned as chairman and CEO of Enron Jan. 23, saying he could not run the company effectively while facing investigations and lawsuits into Enron's collapse.
His resignation from the board closes 16 years of service at Enron, leaving his diminished stock ownership the only remaining link to the company.
He retired as chief executive in February 2001, but resumed the position when his successor, Jeff Skilling, quit in August.
Lawmakers said Monday that Skilling is still expected to cooperate. Former Chief Financial Officer Andrew Fastow, also scheduled to testify, has notified lawmakers he will not answer questions.
In a brief statement on Lay's resignation from the board, Enron said, "We regret that circumstances have led to this. We wish Ken the best."
Chronicle reporters Laura Goldberg in Houston and Patty Reinert in Washington contributed to this story.
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