Former Enron Corp. Chairman Kenneth Lay, in his first day on the witness stand in his criminal trial, proclaimed his innocence and blamed the downfall of Enron in 2001 on criminal acts by former Chief Financial Officer Andrew Fastow, activities of short sellers who would benefit from a decline in Enron’s stock price, and negative reporting about Enron in The Wall Street Journal.
Those factors and others led to erosion of investor confidence in Enron, which in turn led to liquidity problems, Lay testified on April 24 in response to questions from defense attorney George “Mac” Secrest of Houston.
“In the end, Enron’s failure was caused by a classic run on the bank,” Lay testified.
Lay said Fastow contributed to troubles at Enron because he was stealing from the company, the short sellers had a hand in it because “they did everything they could to destroy confidence in the company” and The Wall Street Journal was to blame because of stories the newspaper wrote beginning in October 2001 that raised questions about Fastow’s activities at Enron. Fastow, who pleaded guilty to two criminal charges and agreed to a 10-year prison term, admitted during his testimony in March to stealing from the company and said he helped Enron manipulate its earnings.
|