The former chairman and chief executive of Enron, Mr Kenneth Lay, is almost broke and might have to declare bankruptcy, his wife Linda tearfully told NBC's Today show yesterday. Like many of those affected by Enron's woes, her own family was fighting for survival, she said.
"Everything we had mostly was in Enron stock. We've had long-term investments and those long-term investments have cash calls. Virtually - other than the home we live in - everything we own is for sale," she said.
The Lay family home takes up a floor of Houston's most exclusive condominium, with a separate house for servants. Mr Lay also has four properties in the ski resort of Aspen, Colorado, three of which went for sale in mid-November, according to Aspen estate agent Joshua Saslove.
One Aspen four-bedroom residence with two-car garage and caretaker's quarters is listed at $6.15 million (€7.13 million); a five-bedroom log and stone cabin is valued at $6.5 million; and an undeveloped lot at $2.9 million. The Lays plan to keep a 4,200 sq ft home valued at $3 million, Mr Saslove said last week.
"We are fighting for liquidity. We don't want to go bankrupt," Mrs Lay said, adding that her husband was an "honest, decent, moral" man who did nothing wrong in the collapse of the energy trading corporation in December.
Mr Lay has been the focus of investor and employee anger over the Enron collapse, and is under investigation for cashing in shares worth $101 million between early 1999 and July 2001 while persuading employees not to sell. He said the money was to repay loans advanced by the company.
The head of Enron for more than 15 years, Mr Lay now faces huge legal bills as the subject of more than 50 lawsuits resulting from Enron's bankruptcy as well as federal and congressional investigations. Hundreds of current and former employees yesterday filed a class action lawsuit seeking damages for losses in their pension plans and naming Mr Lay, Mr Jeffrey Skilling, another former chief executive, and Mr Andrew Fastow, the former chief financial officer, as defendants.
Mr Lay could be entitled to a severance package from Enron worth $25 to $50 million, based in part on the $200 million in compensation he received from Enron since 1999.
However, he must take his place in line as a creditor. He may also forfeit an annual pension of nearly $475,000, a $12-million life insurance policy and payment of taxes on any severance pay.
Mr Lay used Enron as a private bank with a line of credit of as much as $7.5 million that he used often to help cover bad investments, according to his lawyer. He drew down the loan on 15 occasions between February and October, repaying with stock, as Enron's collapse was accelerating.
Mrs Lay told NBC her husband, who resigned his posts at Enron last week, had been grossly misunderstood and was a victim of "mass hysteria" around the biggest bankruptcy in US history. The only thing I know, 100 per cent for sure, is that my husband is an honest, decent, moral human being, " she said.
