Kenneth LayShortly before his death, at the age of 64 following a heart attack, the former Enron chief executive Kenneth Lay lamented that he had lived both the American dream and the American nightmare. Born into rural poverty, he had built an immense fortune at Enron, the Houston energy firm. He shaped himself as a leading light among the oil barons of Texas; he was famously dubbed "Kenny boy" by George Bush, and at one point was tipped to enter the administration.
Then five years ago, he lost it all. Nightmare was an apposite description, although few extended much sympathy for his plight. Enron was engulfed by scandal and Lay's reputation shattered. Thousands of people lost their jobs and life savings as the company filed for bankruptcy in late 2001. Lay and Enron became shorthand for corporate fraud and late-night comics looking for an easy laugh. Lay testified in court that he was $100 million in debt. He was finally convicted in May on six charges of fraud and conspiracy. He was due to be sentenced in September, and had been expected to be jailed for between 20 and 30 years. He maintained his innocence until the end.
Lay was born in Tyrone, Missouri. His father, Omer, was a Baptist minister who made money from selling farm equipment and working at a department store. His parents had little formal education. Lay did what he could to supplement the family income, delivering newspapers and mowing lawns. "I spent a lot of time on a tractor and had a lot of time to think," he once told the Houston Chronicle. "I was enamoured with business and industry. It was so different from the world in which I was living." He took an economics MA at the University of Missouri and, in 1970, a doctorate at the University of Houston.
Lay began his career at the oil major Exxon in 1965 as an economist. After a spell in the US navy, he had his first brush with government, serving as under-secretary for energy (1972-74). For the next eight years, he held various executive positions in the oil industry, including, fatefully, at Houston Natural Gas. In 1985, the company merged with a rival, InterNorth, and was renamed Enron. Lay became chief executive.
He refashioned the business from a natural gas pipeline company into the biggest name in energy trading. At the height of its hubris, Enron set up a business designed to trade broadband capacity as a commodity. For many observers, Lay's rise and fall could be viewed through the prism of the "new economy" boom and bust.
Enron became, fleetingly, the seventh largest company in America, and Lay was lionised on magazine covers. At his peak, he was said to be worth $400 million. He and his wife, Linda, became a fixture in Houston, where Lay, widely regarded as an affable character, enjoyed great popularity and hosted countless charity events. He supported the arts, helped create the Houston Holocaust museum and financed the professional baseball park. He regularly attended his downtown church, where, according to local reports, the congregation remained supportive throughout, despite members losing large sums in the Enron collapse.
Lay continued as Enron chief executive until February 2001, when he moved to the chairman's office and made way for his ambitious protégé, Jeffrey Skilling. But the cracks were beginning to show in Enron's facade. Skilling resigned six months later, and Lay stepped back into the chief executive role. Things rapidly began to unravel. In October 2001, the company spooked Wall Street by reporting losses of $1 billion. Investors fled in panic and in December it filed for what was then the biggest ever bankruptcy. The Enron collapse began a sordid period in US corporate history, as a welter of financial fraud was uncovered at big name companies.
Lay and Skilling were accused of a vast conspiracy designed to give the impression that the company was in better financial shape than it actually was. They were convicted of using accounting trickery to fudge the numbers, and offshore vehicles to hide debts and inflate revenues. Skilling was regarded as the chief architect of the fraud; the lesser charges against Lay suggested he had carried on the deception after resuming the top job.
Lay endured four years of uncertainty before the government brought his case to trial this year. He had refused to be cowed, although he and Linda made fewer public appearances. Last December he risked jeers by taking to the podium at the Houston Forum to rail against his persecution in front of a gathering of businessmen and women, claiming he had been a victim of "political and public hysteria". The breakthrough for prosecutors had come in early 2004, when they secured a guilty plea from former finance chief Andrew Fastow. Both Lay and Skilling contended that Fastow alone was to blame.
When he finally appeared on the stand, Lay rued the fact that he had taken the chief executive job back after Skilling's departure. "I was just a couple of months away from being 60," he said. "I was looking forward to a somewhat more normal life, a more relaxed life." His wife Linda, whom he married in 1982, and five children survive him.
Kenneth Lee Lay, business executive, born April 15th, 1942; died July 5th, 2006