Lay’s lawyer facing surgery, but Enron case will proceed
Posted on Wednesday, April 5, 2006
HOUSTON — The lead lawyer for Enron Corp. founder Kenneth Lay has been hospitalized and is facing surgery to clean out a clogged artery — but his client’s fraud-and-conspiracy trial will forge ahead without him.
“I really regret missing parts of Ken Lay’s trial,” his lawyer, Michael Ramsey, said in a telephone interview from his hospital bed Tuesday. “It’s the first time in my career I’ve missed court because of health problems.”
Lay is on trial alongside former Enron Chief Executive Jeffrey Skilling.
But Ramsey, 66, said he and the rest of Lay’s legal team want the trial that started with jury selection Jan. 30 to continue.
Lay, 63, told reporters outside federal court in Houston on Tuesday that he and his other lawyers hope a healthier Ramsey returns to the trial before it ends, but he’s confident the other lawyers — including Bruce Collins, Ramsey partner Chip Lewis and George “Mac” Secrest — can carry on.
“Certainly he will be out of pocket for a few days,” Lay said, noting that Ramsey was communicating regularly with the team. “I fully expect him to be back before the trial is over.”
Inside the courtroom Tuesday, defense witnesses disputed earlier testimony that Enron layoffs were disguised as reassigned jobs and that a troubled power project in India helped spell financial disaster.
The defense began its case this week, but its main event — testimony from the defendants — has yet to begin.
Lead Skilling lawyer Daniel Petrocelli said Tuesday that his client may begin testifying Thursday, depending on how long other defense witnesses take.
Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors, while Lay faces six counts of fraud and conspiracy. Last week, Lake approved prosecutors’ request to drop three counts against Skilling and one count against Lay to streamline their case.
A former Enron human resources supervisor testified Tuesday that people who moved from the company’s struggling broadband venture in March 2001 were given opportunities to shift assignments, disputing earlier testimony that most were laid off or targeted to be laid off.
Sarah Davis, testifying for a second day, said cuts at Enron Broadband Services were “redeployments” and not layoffs. Marla Barnard, the human resources supervisor for the broadband division, told jurors the same thing.
In February, Kenneth Rice, the division’s former chief executive officer, testified for the prosecution that Skilling told him to characterize layoffs at the unit as redeployment so some 250 employees would believe they would keep their jobs and analysts who influenced the company’s stock would remain bullish on the weakening venture.
Asked by Skilling lawyer Mark Holscher if Rice or anyone else at Enron told her the cutbacks were “a ruse to lay people off,” Davis replied, “No. It was redeployment.”
At the time of the broadband cuts, Skilling told analysts the unit had “strong growth,” and workers
were being
redeployed because
the telecom
industry was in a
meltdown, but
Enron intended
to ride out the
industry’s
problems and forge
ahead with its broadband ventures.
Rice testified that in addition to the layoffs, the unit burned through $ 100 million per quarter and efforts to stream video content on a fledgling network or trade Internet bandwidth were faltering.
Also Tuesday, Wade Cline, Enron’s current general counsel, told jurors about his efforts to help the company recoup its $ 1. 2 billion investment in a 2, 184-megawatt Dabhol power project in Western India in 2001. His testimony was intended to counter that of former Chief Financial Officer Andrew Fastow and former Treasurer Ben Glisan Jr., who both said they warned Lay in August and October 2001 that the Dabhol project was overvalued and could contribute to multibillion-dollar write-offs.
The Dabhol project was shut down in June 2001 after a dispute over electricity tariffs between Enron and its only customer, the Maharashtra State Electricity Board. The dispute also halted construction of a second plant at the site.
Cline said Enron negotiated to recoup at least its investment in the project and expected to prevail. But the dispute remained mired in arbitration until June last year — long after Enron sought bankruptcy protection in December 2001 and had transferred its interest to former minority partners.
He also acknowledged on cross-examination that Enron — after bankruptcy — recouped only $ 20 million.
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