Lay: This is Fastow's fault
In his last moments on the stand, the Enron founder also contended that government witnesses were coerced into testifying.
HOUSTON (CNNMoney.com) – In his sixth and final day on the stand, Enron founder Kenneth Lay testified that the most painful moment in his life was watching Enron go into bankruptcy.
Lay, who has had a rough time on the stand as he heatedly sparred with government prosecutor John Hueston, muted his belligerent tone in his final minutes on the stand.
"I loved Enron very much, I loved Enron employees very much," he said quietly. "I did everything that I could humanly do at this time" to save the company, but ultimately he said it was too late.
Lay admitted that he made mistakes, but insisted that his biggest error in judgment at Enron was hiring Andrew Fastow and promoting him to the role of chief financial officer – a position that allowed Fastow to bilk the company of millions of dollars.
"Without Andy Fastow, Enron would not have failed," Lay testified.
For most of Lay's time on the stand, he's played the blame game, pointing the finger at Fastow, negative articles in the press and short-sellers to account for Enron's ultimate demise.
Lay and former chief executive Jeffrey Skilling have maintained that there was no wrongdoing at Enron, aside from Fastow's misdeeds, and have dismissed government witnesses – which include former Enron executives – as lying to jurors to protect themselves from the government's wrath.
During a brief re-cross by government prosecutor John Hueston, Lay said that former Enron treasurer Ben Glisan, who is the only executive currently serving jail time, was coerced by the government.
"I think he was put in solitary confinement so you could work your will," Lay said curtly. "He did not tell the truth, that I know."
Earlier, under re-direct from his lead defense attorney George "Mac" Secrest, Lay testified that he was facing a personal financial crisis as Enron spiraled into bankruptcy, but held on to 5 million shares of Enron stock and options until the very end.
Lay attempted to recast himself in a positive light after the government showed jurors evidence of the lavish lifestyle he led as he sold $70 million in Enron stock – a move prosecutors contend was an attempt to dump Enron shares as he became aware of the company's financial troubles.
Lay testified that he also sold $13 million worth of stock he had in other corporations in 2001 to meet margin calls, but that he had to tap his Enron stock because 90% of his net worth was wrapped up in the company.
On Monday, Hueston told jurors that Lay had a number of other options when he had to meet the margin calls in 2001, including taking out an additional line of credit and cashing in holdings in other companies.
Lay said the fact that he held 5 million Enron shares – even as the stock plummeted and his net worth shrunk rapidly - until Enron went bankrupt indicated his faith in the company. He said the only reason he borrowed an additional $1 million from Enron just days before the company imploded was because he was trying to get his finances in order so that he would be able to lead the company through its darkest days.
However, during cross-examination on Monday, Hueston said that Lay's decision to borrow $1 million from Enron even though he knew the company was facing a liquidity crisis was evidence that Lay "saw to it that [he was] taken care of before the Enron employees."
In search of allies
During redirect, Lay also denied that he was trying to meet with trial witnesses, such as former employee Vince Kaminsky, in order to get his story straight, as the prosecution has contended.
He said he was hoping that friends and associates would be willing to speak on his behalf, adding that intimidation from the Enron Task Force has made it "incredibly difficult, if not impossible" to get people to testify for the defense.
Lay said he wasn't aware that Kaminsky was on the witness list when he tried to contact him.
"It may surprise you, Mr. Hueston, but I didn't memorize that list," he said under re-cross.
Lay also denied that he or Skilling tried to mislead the public by estimating that Enron's stock would reach $125 a share at an analyst meeting in January 2001. He said the company never implied it was worth that much money.
Lay testified that he believed that all of the businesses, including its broadband unit and its retail energy business, were in solid shape and he was optimistic that if all went well, the stock could hit that goal. But he said the company informed analysts that the stock price estimate was a forward-looking statement, and suggested that analysts were sophisticated enough to know that it was subject to change.
And Lay once again fielded questions on his investment in Photofete – a startup company run by Skilling's ex-girlfriend that both he and Skilling invested in without disclosing that fact to the board of directors.
Lay said he told the board's lead auditor David Duncan about the small investment and assumed if it warranted disclosure Duncan would have mentioned it. But that was a violation of Enron's own code of ethics, which Lay touted at the company.
"Rules were important but you didn't follow them" Hueston remarked. "Rules are important but you should not be a slave to the rules either," Lay responded.
Lay's testimony will be followed by four character witnesses, including Houston Astros owner Drayton McLane, and a line of so-called "expert witnesses" for both Lay and Skilling.
Combined, Lay and Skilling face almost three dozen charges of fraud and conspiracy and could serve 20 to 30 years in jail if convicted. Lay has the added burden of facing another trial for bank fraud once the jury begins deliberations.
Enron filed bankruptcy in December 2001, causing billions in losses for investors and costing thousands of employees their jobs.
For a behind-the-scenes look at the whole Enron debacle, click here.