Lunch was interesting in Houston yesterday as former Enron CEO and federal criminal defendant Ken Lay was the featured speaker at the Houston Forum‘s monthly luncheon. An earlier post on the lunch is here and the NY Times article on Mr. Lay’s talk is here.
From Mary Flood’s article on the talk, it sounds as if Mr. Lay has been reading this blog as he bones up for testifying at trial (which decision to testify, as Ellen Podgor notes, may be premature):
Flanked on the podium by Texas and U.S. flags, and a gold- and red-trimmed Christmas tree, Lay read from a prepared text in which he attacked the Justice Department for prosecuting the accounting firm Arthur Andersen, destroying the company and dropping the case. He said the prosecutors have been trying to criminalize normal business practices.
“If asked, I am certain that the Enron Task Force would say they have taken so much time because the crimes at Enron are so complicated,” he said. “However, I would say the Enron Task Force has taken so much time because it is complicated to find crimes where they do not exist.”
He said he doubts most of those who pleaded guilty in this case were criminals ó rather they were bullied into their pleas by prosecutors. . . .
Prosecutors want to narrow the case, and defendants want more witnesses and experts, Lay said.
“Why do we want the truth in the case, and why does the Enron Task Force want the truth out of the case?” Lay asked.
Frankly, that’s a darn good question. Despite that, Chronicle business columnist Loren Steffy is not impressed with Mr. Lay’s talk (blog post here).
Mr. Steffy’s skeptical reaction to Mr. Lay’s proclamation of innocence is quite common, but misses the difference between being held responsible in civil context as opposed to a criminal one. Few people — probably not even Mr. Lay — would contend that Mr. Lay should not share at least some responsibilty in a civil lawsuit for Enron’s demise. However, absent the state making a clear presentation of an alleged criminal act, the responsibility for Enron’s descent into insolvency should be sorted out among all responsible parties in a civil lawsuit, not a criminal case against a few of the more prominent responsible parties. In that regard, the Enron Task Force’s indictment (download pdf here) and current statement of its criminal case against Mr. Lay and his co-defendants (download pdf here) reveals that the Task Force’s presentation of criminal charges against Mr. Lay is anything but clear. Indeed, a lack of coherence in the presentation of criminal charges against Enron-related defendants has been a recurring problem for the Enron Task Force.
Taking risk is how entreprenuers create jobs for communities and wealth for business owners. Risk takers sometimes make dubious or plain bad decisions, but that’s an essential part of the price that we pay to enjoy the jobs and wealth that are derived from a bustling market economy. Criminalizing merely bad business decisions dampens that essential entreprenurial spirit and will ultimately lead to job loss and dimunition of shareholder wealth. That is simply not a coherent use of our criminal justice system.
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