Kenneth Lay | |
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 Mugshot of Lay upon his arrest in 2004 | |
| Born | Kenneth Lee Lay (1942-04-15)April 15, 1942 Tyrone, Missouri, U.S. |
| Died | July 5, 2006(2006-07-05) (aged 64) Snowmass, Colorado, U.S. |
| Education | |
| Occupation | Businessman |
| Spouses |
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| Children | 5 |
| Signature | |
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Kenneth Lee Lay (April 15, 1942 – July 5, 2006) was an American businessman and political donor who was the founder, chief executive officer and chairman ofEnron. He was heavily involved inEnron's accounting scandal that unraveled in 2001 into the largestbankruptcy ever to that date. Lay was indicted by agrand jury[1] and was found guilty of 10 counts of securities fraud attrial.[2] Lay died in July 2006 while vacationing in his house nearAspen, Colorado, three months before his scheduled sentencing.[3] A preliminary autopsy reported Lay died of a heart attack caused bycoronary artery disease. His death resulted in avacated judgment.[4][5][6]Conspiracy theories regarding Lay's death surfaced, alleging that it was faked.[7]
Lay left behind "a legacy of shame" characterized by "mismanagement and dishonesty".[8] In 2009 a list posted onPortfolio.com ranked Lay as the third-worst American CEO of all time.[a][9] His actions were the catalyst for subsequent and fundamental corporate reform in regard to "standards of leadership, governance, and accountability".[8]
Lay was one of America's highest-paid CEOs; between 1998 and 2001, he collected more than $220 million in cash and stock in Enron,selling 1.7 million of those shares.[10] However, during his trial in 2006, Lay claimed that Enron stock made up about 90% of his wealth, and that hisnet worth at that time was negative $250,000.[11]
Lay was born in theTexas County, Missouri, town ofTyrone, the son of Omer and Ruth (née Rees) Lay.[12] Lay's father was aBaptist preacher and Lay grew up in poverty after the family'sgeneral store failed. Later in Lay's childhood, his family relocated toColumbia, Missouri, and Lay attendedDavid H. Hickman High School and theUniversity of Missouri, where he studiedeconomics, receiving aBachelor of Arts in 1964 and aMaster of Arts in 1965.[13][14] He served as president of theZeta Phi chapter of theBeta Theta Pi fraternity at the University of Missouri.[14] He earned aDoctor of Philosophy in economics from theUniversity of Houston in 1970.[13][14][15]
He worked atHumble Oil as an economist from 1965 to 1968 in the Corporate Planning Department.[13][14][15][b] In 1968, Lay entered theOfficer Candidate School for theUnited States Navy where, from 1968 to 1971, he rose to the rank of lieutenant and was the special assistant to the Navy Comptroller and Financial Analyst at the Office of Assistant Secretary of the Navy in the Department of the Navy atThe Pentagon.[14]
Lay worked from 1971 to 1972 as a technical assistant to commissioner and vice chairman (federal energy regulator) of theFederal Power Commission and served as the energy deputy undersecretary for the United States Department of Interior until 1974.[13] In 1974, he returned to the business world as an executive atFlorida Gas Transmission[13] and was president ofContinental Resources from 1981 to 1982.[14][15] In 1982, he joined Transco Energy Company, owner of theTranscontinental Pipeline, in Houston and held the positions of president, chief operating officer and director until 1984 when he became chairman and CEO of the Houston Natural Gas Company.[14][15]
By the time energy was deregulated in the 1980s, Lay was already an energy company executive and he took advantage of the new climate when Omaha-basedInterNorth[c] bought his companyHouston Natural Gas and changed the name toEnron in 1985.[14][d]
He was also a member of the board of directors from 1993 to 2001 ofEli Lilly and Company[15] and a director atTexas Commerce Bank.[20] In 1996 he held negotiations to replaceRobert E. Allen as the CEO ofAT&T.[21]
Lay was a friend of theBush family, including former presidentGeorge H. W. Bush. He made monetary contributions, led several committees in theRepublican Party and was co-chairman of Bush's1992 re-election committee.[22] As President, Lay flew Bush and his wife to Washington on an Enron corporate plane.[23] In December 2000, Lay was mentioned as a possible candidate for eitherUnited States Secretary of Energy orSecretary of the Treasury underGeorge W. Bush.[21][24] He was not nominated because it was decided that the administration already included too many energy businessmen fromTexas.[21]
Lay additionally had friendly relations with the Republican politiciansGerald R. Ford,Dick Cheney, andJames A. Baker III as well as the Democratic politiciansBill Clinton andAnn Richards. He encouragedJohn Ashcroft to campaign in the2000 Republican Party presidential primaries, although this was partially to ensure him as aspoiler candidate to help Bush win the race.[21]
From 1989 to 2002, Lay's political contributions totaled $5.8 million, with 73% going toRepublicans, and 27% going toDemocrats.[25] From 1999 to 2001, he gave $365,410 to the Republican Party.[26]
Lay's company, Enron, went bankrupt in 2001. At the time, this was the biggest bankruptcy in U.S. history. In total, 20,000 employees lost their jobs and in many cases their life savings. Investors also lost billions of dollars. On July 7, 2004, Lay was indicted by agrand jury inHouston, Texas, for his role in the company's failure. Lay was charged, in a 65-page indictment, with 11 counts ofsecurities fraud,wire fraud, and making false and misleading statements. Thetrial of Kenneth Lay and Jeffrey Skilling commenced on January 30, 2006, in Houston.[2]
Lay insisted that Enron's collapse was due to a conspiracy waged by short sellers, rogue executives, and the news media.[27][2] On May 25, 2006, Lay was found guilty on six counts of conspiracy and fraud by the jury. In a separate bench trial, Judge Lake ruled that Lay was guilty of four additional counts of fraud and making false statements. Sentencing was scheduled for September 11, 2006, and rescheduled for October 23, 2006.[28]
Lay died on July 5, 2006, while vacationing inColorado. ThePitkin County Sheriff's Department confirmed that officers were called to Lay's house inSnowmass, Colorado, nearAspen at 1:41 amMountain Daylight Time. Lay was taken to Aspen Valley Hospital, where he was pronounced dead at 3:11 am MDT. The autopsy indicated that he died of a heart attack brought on bycoronary artery disease, and found evidence that he had suffered a previous heart attack.[3]
A private funeral for about 200 people was held in Aspen four days after his death. His body was cremated and his ashes were buried in an undisclosed location in the mountains.[29][30] A memorial service was held a week after his death at the First United Methodist Church in Houston. It was attended by over 1,000 guests, includingGeorge H. W. Bush andJames Baker.[31]
On October 17, 2006, the conviction was overturned due toabatementab initio, a legal doctrine which says the death of a defendant during an appeal results in avacated judgment.[32][33] The government opposed Lay's attorneys' motions of appeal.[clarification needed] TheUnited States Department of Justice issued a statement saying it remained committed to pursuing all available legal remedies for victims of the fraud.[34][35]
At the time of his death, Lay had been married to his second wife, Linda, since 1982. Both Linda and his first wife, Judith, supported Lay through the trial and made appearances at court. Kenneth Lay had two children, three stepchildren, and twelve grandchildren.[36][13]
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