Prosecutors launch strong attack on Enron's Lay

HOUSTON - Prosecutors launched a blistering attack against Kenneth Lay today, accusing the former Enron chief executive and chairman of trying to influence potential witnesses at his criminal trial.

Lay finished nearly three days of questioning by his own lawyer late in the day, and prosecutors immediately began an aggressive cross examination of the man who headed the energy company for 15 years.

Prosecutor John Hueston said Lay phoned a Goldman Sachs banker earlier this month and recited his memory of a meeting the two attended in the weeks before Enron's collapse in December 2001 into the-then largest ever US bankruptcy.

"You told him you would be interested in calling Goldman Sachs people to testify who were in agreement to your version" of events, Hueston said.

"That's not correct, that's wrong," Lay responded, saying he was simply trying to contact people to make sure he had his facts correct about the meeting.

Lay, 64, and former Enron chief executive Jeffrey Skilling, 52, are charged with heading a conspiracy to lie to investors and conceal the failing health of the Houston company that was once the seventh largest in the United States.

Lay did not dispute that he also called former Goldman Sachs vice chairman Robert Hurst twice and another Goldman banker. Those calls prompted a Goldman Sachs lawyer to warn Lay's legal team that Lay should not to call the bank's employees.

At issue was a meeting between Enron and Goldman Sachs in which former Enron chief executive Andrew Fastow said the two sides discussed strategies to save Enron from financial ruin.

Lay has denied that version of events and said Goldman Sachs bankers were only concerned Enron's low stock price could attract a hostile takeover from another company.

Lay also admitted trying to contact former Enron executive Vince Kaminski less than two weeks before Kaminski took the witness stand as a prosecution witness. But he denied knowing Kaminski was due to testify even though his name had long been listed in court documents as a potential witness.

"I was trying to reach Vince Kaminski a long time ... even before I knew he was going to testify in this trial," Lay said.

One of Lay's lawyers, George "Mac" Secrest, told reporters outside the courthouse the government's accusation were bogus.

"It should have been handled differently, but nothing improper took place," he said.

Hueston also confronted Lay with an incident concerning former Enron treasurer and prosecution witness Ben Glisan. The prosecutor said Lay and another of his lawyers, Michael Ramsey, had described Glisan as a liar to reporters, and Ramsey had said Glisan was a monkey who "contradicted the whole theory of intelligent design."

Hueston said Lay had approached Glisan in the courthouse witness room and offered his sympathies to Glisan, who is serving a prison term for crimes he committed at Enron, but turned around and mocked him to the media.

"I can't take full responsibility for what my lawyers say or do," Lay responded.

The prosecutor's strategy appeared to be a bid to show a darker side of Lay from the folksy, grandfatherly image that Lay has sought to project to the jury.

Hueston also questioned Lay about his US$60,000 ($95,923) investment in an internet photo company called Photofete that derived most of its business from Enron.

Skilling also invested US$150,000 in the company, which was run by his former girlfriend, and both executives admitted the investments appeared to violate Enron's code of ethics, although they were not illegal.

Under questioning from his own defence team earlier in the day, Lay defended his actions at Enron, saying its business was healthy and all of its now-controvesial off-balance sheet deals and financial reports were carefully vetted by auditors and lawyers.

Both Lay, who faces six charges of conspiracy and fraud, and Skilling, who faces 28 counts of conspiracy, fraud and insider trading, have contended the company was brought down by a crisis of confidence among investors, biased media reports and predatory investors.

- REUTERS