A few years ago – mid-2002 seems like another lifetime now – I was researching a book on Enron and met a company executive for lunch. He was like so many people who had worked there back in the good times: articulate, sophisticated, not just smart but astute about people in a way that made the company’s collapse all the more astounding when it occurred.
The most interesting piece of information he handed me was this: that he would much rather have been stranded on a desert island with Jeff Skilling, the company’s brusque chief executive, than with Ken Lay, its well-liked founder. Up close, he promised, Jeff Skilling was good company; Ken Lay was not.
The jury that witnessed Lay’s testimony last month and is now deliberating his and Skilling’s fate on a combined 34 fraud charges might not be surprised by that assessment, but back then it was difficult to digest. I had been a Houstonian since 1976, and Ken Lay had emerged from the oil bust of the ’80s as nothing less than a corporate visionary.
If there was trouble among the colossal egos of local business leaders, Ken Lay brought them to the table and forced a compromise. If the African-American or arts community needed a hand, Ken Lay – and Enron – were there, insisting that a world-class city needed equal opportunity and edgy refinement. When the Summit of Industrialized Nations was held here in 1990, Ken Lay was the man President George H.W. Bush tapped to make sure Houston put on a good show, and we did. The heat even broke.
That was the Early Ken Lay: the guy who knew what was best for you.
Certain other facts – that Lay drank his coffee only from a particular kind of china cup, that he had a company plane’s interior repainted during a layover because he didn’t like the color, that in myriad ways he suggested that rules were for lesser beings – were all washed away in the sea of Enron’s profits.
Once Enron imploded, we had to adjust to a different Ken Lay. The problem, former Enron executives explained, was that he didn’t like to tell people no. Lay had been disengaged toward the end, they said – he wanted to be energy secretary, or work on a Middle East peace plan.
So Ken Lay held on to his public reputation as a good guy. It was assumed that the dark prince, Jeff Skilling, had played him.
Then came the tsunami of news reports, investigations and books: the ones that described, in detail, the so-called Valhalla Incident, in which Lay in the ’80s refused to punish two traders who had made illegal transactions because their revenues had saved the nascent company. The ones that contained accounts of all the executives who had warned him in vain that his company was in trouble, not just economically but morally. As we saw the embattled Lay on TV – on his way to church, carrying a Bible – we were left to wonder: Is this man an idiot or a crook?
But if you sat in the courtroom during Lay’s testimony, alas, you stopped asking yourself that question. For those who ascribe to the old saw holding that the personality of a company reflects the personality of the chief executive, well, the win-at-all- costs Ken Lay was there for all to see.
As one of his former executives, Mike Muckleroy, noted in his testimony, Lay tended to shade the truth under pressure as a businessman; and here Lay was, under pressure, revealing the imperiousness, the ungraceful eliding of unpleasant facts that matched the prosecution’s earlier descriptions of his company.
When the government lawyers showed evidence of his desperate attempts at self-preservation (tens of thousands of dollars in bills for antiquing trips and birthday parties while his company was tanking; announcing that he was buying more Enron stock while quietly selling $4 million worth), well, Ken Lay didn’t look like a guy you’d want to be stranded on a desert island with.
As the lead prosecutor, Sean Berkowitz, pointed out, the trial wasn’t a litmus test of whether Ken Lay was a good person; it was about his character at Enron. Maybe Lay will never be able to see himself for who he was, but by the time the jury took to their deliberations, most people in Houston felt they knew him all too well.
Mimi Swartz, an executive editor of Texas Monthly, is the author, with Sherron Watkins, of “Power Failure: The Inside Story of the Collapse of Enron.”