Lay: I Didn't Mislead Public On Enron

Enron Corp. founder Kenneth Lay dropped his famous affable persona as his cross-examination began Wednesday, snarling at a prosecutor who accused him of witness tampering when the ex-chairman and chief executive called several potential witnesses during his fraud and conspiracy trial.

Jurors who had been listening impassively snapped to attention.

"Did you have any conversations to get your story straight for trial?" asked prosecutor John Hueston, equally primed for battle.

"Can you elaborate on that Mr. Hueston?" Lay shot back. "I'm not sure what story you're talking about."

The prosecutor noted that Lay called two Goldman Sachs & Co. executives during the trial regarding a September 2001 meeting about Enron.

Former Enron Chief Financial Officer Andrew Fastow, whom Lay has dubbed a traitor, liar and crook, testified that he and Lay met with the executives to discuss restructuring Enron at the same time Lay was telling employees and reporters that the company was sound. Lay says the executives called the meeting to discuss Enron's vulnerability to a takeover.

Lay said he called the executives in March, the same month Fastow testified, but he said he didn't try to align their memories of the meeting with his.

"I was trying to make sure some facts I had about a meeting we had in the fall of 2001 was right. I was just trying to make sure that all of my facts were as accurate as they could be," he declared, noting further that Fastow "gave a fake version of that meeting."

Hueston noted that Goldman Sachs attorneys warned Lay to stop calling the executives directly, a fact to which Lay glumly replied, "Uh, yeah."

Lay, known in Houston for his avuncular, polite persona and who frequently headlined charity events, shed any pretenses to his usual diplomacy when faced with the prosecutor who secured his indictment in July 2004. Lay's visible anger and Hueston's rapid-fire questioning produced an electricity that has been absent from the trial, even during almost eight days of testimony from his far scrappier co-defendant, former Chief Executive Jeffrey Skilling.

After a short afternoon break, Lay appeared to calm down.

Lay also acknowledged he tried to contact Vince Kaminski, a former top risk analyst for Enron, nine days before Kaminski testified for the prosecution. Kaminski told jurors he got a cold reaction when he told Lay and other executives in October 2001 that Enron needed to "come clean" on questionable financial structures in the weeks before it crashed into bankruptcy proceedings.

"I was trying to reach Vince Kaminski a long time ago before I even knew he would testify. I was trying to reconnect with Vince, to talk to him about some issues I wanted to talk to him about," Lay said.

Kaminski has been on the prosecution's witness list since the government released its first version in November. Lay acknowledged trying to reach Kaminski March 6 through one of his colleagues. He didn't say, nor did Hueston ask, whether he reached Kaminski.

Lay recalled that he has said he endured some character assassination. Hueston asked if he had engaged in character assassination of others during the trial.

"Are you considering yourself in that league?" the ex-chairman said slyly.

"I am a United States attorney. This is my job, and you can call me anything you want," Hueston retorted. He then pressed Lay on whether he denounced former Enron Treasurer Ben Glisan Jr. as he testified for the government that he warned Lay the company was in dire straits throughout the fall of 2001.

"I don't recall what I said," Lay said. "I do think Mr. Glisan lied."

During Glisan's testimony, Lay told reporters, "I've never heard so many lies in one day in my whole life."

Lay then acknowledged that he approached Glisan near a bathroom and a witness area during a break in the ex-treasurer's testimony and tried to soothe him.

Lay said Wednesday he thought Glisan, who is serving a prison term for creating one of the structures Kaminski complained about, has been under "enormous pressure" from federal prosecutors.

The ex-chairman also snapped, "I can't take full responsibility for what my lawyers say and do" when Hueston asked about lead Lay lawyer Michael Ramsey calling Glisan a "monkey." Ramsey has been absent from the trial since early April, recovering from cardiac procedures.

Under questioning earlier in the day from defense lawyer George Secrest, Lay insisted he borrowed $77.5 million from Enron in the months before the company imploded to pay personal debt, not because he knew disaster loomed.

Lay appeared serious and focused on his attorney's questions, reports CBS News correspondent Kelly Cobiella. Regarding a statement he made declaring strong third-quarter earnings in 2001, his attorney asked "At the time you made the statement, did you believe it to be true?" Lay answered, "I did." He went on to say that he was relying on information given to him, and on the stamp of approval from Arthur Andersen, Enron's outside accounting firm.

Prosecutors have highlighted through witnesses that Lay, 64, repaid $70 million of those company loans with Enron stock. But the ex-chairman didn't tell employees or investors about that activity even as he encouraged workers to buy more shares two months before the energy giant sought bankruptcy protection in December 2001.

Lay told jurors he tried to repay the rest, but Hueston blocked him from doing so shortly before he was indicted.

Hueston took up that mantle.

"As of today, you have not repaid one dime of the principle loan of that $7.5 million?" Hueston asked.

"We tried and you blocked it," Lay snapped, adding later, "Mr. Hueston, you know you blocked it," though he didn't explain how.

"It's a simple question," Hueston pressed.

"It's a simple answer," Lay retorted. "Mr. Hueston, when I was sworn in here, I swore to tell the truth and the whole truth, not the partial truth."

Lay faces six counts of fraud and conspiracy from when he reprised the role of CEO following Skilling's abrupt resignation in mid-August 2001. Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors related to his activities from 1999 to 2001.

Once jurors in the Lay-Skilling case begin deliberating, Lay faces a trial without a jury before Lake on bank fraud charges for allegedly reneging on an agreement with banks not to use $75 million in loans to buy Enron stock on margin.