After Skilling Indictment, Will Lay Be Charged?


With Jeff Skilling’s indictment and Andrew Fastow’s plea deal, will former Enron CEO Ken Lay also be charged? The Houston Chronicle says that given Lay’s reputation as a more hands-off CEO, it could be difficult to bring criminal charges against him. Prosecutors could consider whether Lay acted in a “willfully blind” manner, that is whether he deliberately chose to ignore obvious signs of wrongdoing.

Skilling, who had been Enron’s chief operating officer, took Lay’s job as CEO in early 2001. Lay remained chairman and resumed the role of CEO when Skilling resigned in August of that year.

Houston defense lawyer David Berg said prosecutors are likely reviewing whether Lay buried his head in the sand, refused to do anything about what he knew was going on at Enron and benefited from it. Something likely to figure in is the memo Sherron Watkins sent after Skilling resigned that warned of accounting problems at the company. Lay attorney Mike Ramsey has defended Lay’s handling of Watkins’ allegations of accounting irregularities, saying Lay forwarded them to the chief legal counsel.

Several former Enron employees said that Lay should have known what was going on at the company.


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