Before embattled ex-Enron CEO Ken Lay entered the Senate Commerce Committee's Tuesday morning hearing on the collapse of what was once the nation's seventh-largest company, he was permitted to hang out in the committee's staff rooms, away from the glare of the media.
Senators passed him as they walked from the anteroom, into the hearing chamber. But Lay didn't follow their lead. When it was time for him to make his entrance into the small hearing room, he didn't take the direct route and hop from the anteroom into the hearing room. With a coterie of attorneys, a P.R. flack, a bodyguard and his scowling 31-year-old attorney daughter Liz, Lay exited from the staff room back into the hall, and then, once he was finished, back through the hall into the hearing room -- the long, dramatic way.
It was only the latest bit of staging in the political Kabuki of the congressional Enron hearings. After all, the committee had been informed that Lay didn't intend to answer any of its questions, but was going to invoke his Fifth Amendment right to refuse to testify against himself. Though he did so with maximum worminess; his statement in which he invoked his right against self-incrimination also had him pleading innocent and insisting that he wanted to spill his guts and prove his innocence but his attorney, Earl Silbert, had all but held a gun to his head and forced him not to do so.
Some of the myriad Enron-related congressional hearings have been enlightening. Last week's House Energy and Commerce oversight subcommittee hearing shed light on what Enron attorney Jordan Mintz called the "dysfunctionality" of the company, and president and COO Jeffrey Skilling's off-putting combination of arrogance and delusion helped explain how a Fortune 10 company could be so mismanaged.
Other hearings have explored the various legislative remedies that might have prevented the company's implosion -- a separation of accountants who consult and those who audit, more corporate transparency -- or at least offered greater worker protection. Other hearings have been more about political theater. (Time stood still during last week's House Financial Services subcommittee hearing, for instance, when the Democrats and Republicans sparred on whether witnesses should be sworn in and therefore subject to even harsher perjury penalties -- not to mention the more serious imagery on the evening news.)
Perhaps some find, in the scolding diatribes various members of Congress inflict upon executives from Enron and Arthur Andersen LLP, a way for the public to vicariously vent. But being that many of these same congressmen and senators ripped open regulatory loopholes through which Enron's avaricious drove their getaway car, it's not difficult to sneer at some of the expressed pieties. Committee member Sen. Kay Bailey Hutchison, R-Texas -- the No. 1 Senate recipient of Enron largesse, with $101,500, and the No. 8 recipient of Andersen cash, with $25,750 -- chose the moment of her opening statement at Tuesday's hearing to tout her pension reform bill.
Clueless questions and mispronounced names -- a House affliction more than a Senate one -- never bolster the seriousness of the proceedings, either. Nor does endless self-important windbagging, like that from Sen. Barbara Boxer, D-Calif., Tuesday morning, complete with charts held up by some poor staffer who was made to stand next to her during her opening statement as if she were a human easel. Like every Western senator, Boxer was trying to make the point that last year's Left Coast energy crisis was Enron's fault, though all she really proved today is that Skilling -- already a House-certified asshole -- once made an insensitive joke about the crisis.
The proceedings began with every senator on the committee getting in his or her shot. Ranking Republican Sen. John McCain, R-Ariz., who just had a melanoma removed, so his bandaged face made him look like he'd come from a street fight -- took an ironic Lay quote from a speech to the Center for Business Ethics and threw it back at him.
Lay sat in his front-row seat, staring blankly. His gold watch sparkled from beneath a monogrammed KLL cuff. His legs twitched almost imperceptibly.
"We need to put the pieces together to find out what has happened," said Sen. Byron Dorgan, D-N.D., chairman of the consumer affairs subcommittee.
The subcommittee's ranking Republican, Sen. Peter Fitzgerald, of Illinois, was less diplomatic, calling Lay "the most accomplished confidence man since Charles Ponzi." He said he'd be inclined to compare Lay to a carnival barker except "it wouldn't be fair to carnival barkers."
On and on through the ranks: the No. 3 Senate recipient of Enron money, Sen. Conrad Burns, R-Mont. ($23,200); the No. 7 Enron campaign cash recipient, Sen. Gordon Smith, R-Ore. ($14,500); the No. 5 Andersen recipient, Sen. Ron Wyden, D-Ore. ($33,590).
"How did you think you could get away with it?" asked Sen. John Ensign, R-Nev., the No. 16 recipient of Enron Senate campaign cash ($7,500) and the No. 7 recipient of cash from Arthur Andersen ($25,850).
Throughout the tirades and accusations, Lay didn't so much as flinch. An unruffled Lay. Though when it was time for him to speak -- after 77 minutes of Senate sneering -- he insisted he was all broken up inside.
Saying he was at the hearing "with a profound sadness about what has happened to Enron, its current and former employees, retirees, shareholders and other stakeholders," Lay insisted that he truly, madly, deeply "wanted to respond -- to the best of my knowledge and recollection -- to the questions you and your colleagues have."
It was perhaps telling that even when invoking the Fifth, Lay threw in those weaselly attorney-screened phrases of plausible deniability.
"I have, however, been instructed by my counsel not to testify, based on my Fifth Amendment constitutional rights," Lay continued. "I am deeply troubled about asserting these rights because it may be perceived by some I have something to hide. But after agonizing consideration, I cannot disregard my counsel's instruction."
Unlike his former protigi Skilling, who testified before a House committee last week -- in front of many congressional investigators who were unconvinced by his claims of innocence -- Lay then announced that he was refusing to answer the committee's questions. But employing logic as confusing and disingenuous as the shell corporations that drove his company into bankruptcy, Lay insisted he was doing so precisely because he was innocent of any wrongdoing, citing a unanimous Supreme Court decision from March 2001 that stated "one of the Fifth Amendment's basic functions ... is to protect innocent men."
During the break after his client pleaded the Fifth, Lay's attorney, Silbert, claimed he didn't remember which case Lay was referring to. Let me refresh his memory. In 1995, 2-month-old Alex Reiner died because of injuries from shaken baby syndrome. His father, engineer Matthew Reiner, was found guilty of involuntary manslaughter, but he insisted that Alex's injuries were the fault of the family nanny, Susan Batt. Days before the trial, Batt -- who was not an official suspect in the baby's death -- told prosecutors that she wouldn't take the stand unless given immunity from prosecution and if they didn't give her immunity she would plead the Fifth. She was given immunity and Reiner was convicted, but the Supreme Court of Ohio ruled that a witness who denies all culpability does not have a valid Fifth Amendment privilege against self-incrimination. The U.S. Supreme Court overturned that decision.
In this drama, I suppose that Lay would play the part of the falsely accused nanny. (Would that make Skilling or former chief financial officer Andrew Fastow -- or both? -- the infanticiding daddy?) Regardless, the seven laid-off Enron employees who were in the room, courtesy of the Rev. Jesse Jackson, didn't seem to find him sympathetic.
"He said he was 'saddened,' he didn't say he was sorry," said Gwendolyn Gray, who added she helped cut 30 to 40 retention bonus checks for executives just before the company declared bankruptcy and she was laid off. "It just makes me sick."
After Lay left Capitol Hill, the man who led Enron's in-house investigation into the matter, University of Texas School of Law dean William Powers Jr., testified that documents mysteriously shredded at Enron's Houston headquarters might have provided the senators with answers to some of the questions they were asking. "There may be information on those documents that were shredded that would have helped," he said. He said that Lay had clearly signed off on one of the questionable partnership transactions -- "Mr. Lay had signed off on a deal approval sheet," he said -- but more generally faulted Lay for the anarchic atmosphere that allowed Fastow to set up his shell game. Lay "bears significant responsibility ... for Enron's failure to implement sufficiently rigorous procedural controls to prevent the abuses."
Powers went on to argue that there was widespread corporate dishonesty even without Fastow's self-dealing partnerships. "There has been much discussion about who understood what about Fastow and his partnerships," Powers said. "But there is no question that virtually everyone -- from the board of directors on down -- understood that the company was seeking to offset its investment losses with its own stock. That is not the way it is supposed to work. Real earnings are supposed to be compared to real losses."
"Leadership and management begin at the top, with the CEO, Ken Lay," said Powers. "This is a tragedy that could have and should have been avoided."
Before Lay testified, Fitzgerald had told him that "when you walk out that door it will be a stunning coda to the collapse of Enron." But it, like the hearing itself, wasn't stunning at all. An Enron executive feigning regret but shrugging off responsibility; a room full of senators who got angry and involved two years too late; a multimillionaire invoking his right against self-incrimination -- it's all becoming rather ordinary.
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