Lay Resigns From Enron's Board
HOUSTON – Kenneth Lay resigned Monday from Enron Corp.'s board of directors, cutting his last tie beyond stock ownership to the company he nurtured for 16 years before it collapsed in history's largest bankruptcy.
Lay stepped aside as Enron's chairman and chief executive on Jan. 23, citing his inability to run the company effectively while facing numerous investigations and lawsuits stemming from its demise.
But he maintained his position on the board until Monday, the same day he was supposed to testify before two congressional committees before deciding Sunday to maintain his public silence regarding Enron.
"I want to see Enron survive and successfully emerge from reorganization," Lay said in a statement. "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, 59, had agreed to appear at two hearings in Washington on Monday and another one Tuesday with no immunity guarantees. But his lawyer, Earl Silbert, advised Lay to cancel those appearances after several members of Congress appeared on Sunday news shows accusing Lay and other Enron executives of committing crimes.
Silbert said in a letter sent Sunday to the chairmen of the House Financial Services and Senate Commerce committees that the hearings had taken on a "prosecutorial" tone and that Lay "cannot be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard."
Lay served as chairman and chief executive since 1986, after the company was formed in 1985 by a merger of Houston Natural Gas and Omaha, Neb.-based InterNorth. He retired as chief executive in February 2001, but resumed the position when his successor, Jeff Skilling, quit in August 2001.
"My concern is for current and former Enron employees and other stakeholders, and I feel it is in their best interest for me to step down from the board," Lay said Monday.
In an internal probe released Saturday, board member William Powers Jr., dean of the University of Texas School of Law, said top members of Enron's financial team created or invested in partnerships that facilitated accounting abuses that earned them millions as others charged with oversight — including Lay — failed to watch them.
Lay told Powers and two other board members who conducted the probe that he had only cursory knowledge of the employees' involvement in the partnerships.
He has been heavily criticized for urging Enron employees to buy company stock a month after he was warned by executive Sherron Watkins in August that questionable accounting practices could cause the former energy giant's to implode in scandal.
Enron filed the largest bankruptcy in history Dec. 2 and left thousands of employees jobless amid piecemeal revelations of those accounting practices and restated earnings that erased millions of dollars in profits since 1997.
Those partnerships, which earned millions of dollars for Enron executives and employees who ran and invested in them, helped the company keep half a billion dollars in debt off its books while maintaining what appeared to be a healthy credit rating.