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Kenneth Lay began his career at Exxon Corporation
predecessor Humble Oil & Refining as an
economist (1965-68). He then served in the
U.S. Navy beginning in 1968, working in navy
procurement in Washington. In 1971, Ken was
appointed to the Federal Power Commission as
a federal energy regulator. He was next appointed
deputy undersecretary of energy at the Interior
Department (1972-74), served as vice president
of Florida Gas Company (1974-76), president
of Florida Gas Company (1976-79), executive vice
president of The Continental Group (1979-81),
President and chief operating officer of Transco
Energy (1981-84), and president and chief operating
officer of Houston Natural Gas Corporation
(1984-85). In 1985, HNG merged with InterNorth
to form Enron, and Kenneth L. Lay became
chairman and CEO of the combined company the
next year. He served in those roles from
1986 till 2002. Additionally, he served on
the Board of Directors of Eli Lilly and Company,
Compaq Computer Corporation, and Trust Company
of the West. Lay was a Phi Beta Kappa graduate
in economics from the University of Missouri,
where in 1965, he also received a master's
degree in economics. In 1970, he earned his
Ph.D. in economics from the University of Houston.
Over the course of Kenneth Lay's 15 years at the
helm of Enron, Fortune 500 would rank the company
as high as seventh amongst the nation's largest
companies, with claimed annual revenues of $101
billion. The only problem was, much of Enron's
success turned out to have involved a series of
elaborate scams. Various accounting tricks, phony
deals, and numerous dummy corporations were utilized
to give the appearance of a growing, thriving,
wildly-profitable company. The scams were successful
and brought scores of investors plunking their life
savings down to get just a tiny piece of the phenomenal
profits flooding Enron's coffers. In actuality, the
company was deeply in debt, and on December 2nd,
2001, Enron declared bankruptcy.
One of the many scams involved an attempt to make
profits look larger than they actually were by
creating trades with dummy corporations, keeping
all profits for Enron, while hiding loses in the
phony corporations. Thus the true indebtedness of
the company would be completely hidden from investors.
Enron's numerous dummy companies had been trading
natural gas and electricity among themselves, with
each trade increasing the price, until the commodities
were then sold to customers for several times their
actual market value. The practice was responsible
for bankrupting businesses and households, while
Enron reported staggering earnings of $101 billion
for the year.
In October of 2001, Enron admitted it was "missing"
$1.2 billion. By the end, the once-mighty energy
conglomerate had become a financial labyrinth which
hid massive liabilities, while allowing those in
power to enrich themselves with millions of dollars.
Lay was accused of lying to his employees, investors
and Wall Street about the company's health, and was
charged with numerous counts of bank fraud, wire
fraud, securities fraud, and conspiracy to commit
securities and wire fraud. Subsequent investigations
revealed a conspiracy to prop up Enron's stock price
and conceal billions of dollars in debt using
sophisticated phony business partnerships. The
investigations resulted in guilty pleas or convictions
of more than two dozen people, including some of the
top executives at Enron. In 2006, Ken Lay was found
guilty of conspiracy, securities fraud, wire fraud,
and bank fraud.
Enron's demise wiped out billions of investor
dollars, and cost the jobs and pensions of thousands
of employees. Thousands also lost their retirement
savings as the company filed for bankruptcy. Both
the name Enron, and Ken Lay's name, have become
synonymous with, and shorthand for, corporate corruption
and accounting fraud. Most damning for Ken Lay was
the fact that he had actually been apprised of some
of the irregularities and potential corporate malfeasance,
yet he was encouraging his own employees to buy more
stock, telling them the company would rebound, while
during the same period, he had been rapidly liquidating
millions of dollars of his own personal Enron stock.
Even after his crimes had been made public, many of
those in Houston, Texas, chose to focus on his previous
philanthropic efforts. This was somewhat understandable
in light of the fact he had poured millions into civic
and philanthropic projects throughout the city before
his downfall.
Expected to be sentenced to between 20 and 30
years in jail, the 64-year-old disgraced founder
of Enron faced the prospect of spending the rest
of his life in prison, and was due to be sentenced
on October 23rd, 2006. He died unexpectedly of a
heart attack, July 5th, 2006.
State Senator Joe Dunn (D-Santa Ana), who headed a
special committee that investigated the charges of
market manipulation, commented: "We cannot allow his
death to rehabilitate his image, this is a man who
is responsible for damaging millions of lives."
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