|
Enron stock sold for loans
|
 |
January 21, 2002: 8:01 a.m. ET
Lay's attorney says sales didn't reflect concern about company finances.
|
NEW YORK (CNN/Money) - Enron Corp. Chairman and CEO Kenneth L. Lay sold shares of the company's stock last year because of concern about loans made to him for investment purposes, and not because he was anxious about the energy trader's financial position, his attorney said in an interview published Monday.
Earl J. Silbert, Lay's attorney, told the New York Times that Lay had put up shares of Enron stock as collateral for other investments, which Silbert said he could not detail. As both the value of Enron's shares and his personal investments declined last year, Lay's lenders demanded more collateral, Silbert said.
|
|
|
Enron CEO Kenneth Lay | |
The attorney told the Times that most of the transactions related to the loans occurred before August, when Enron restated its quarterly results - a point that began the march toward the Dec. 2 filing of the largest bankruptcy case in U.S. corporate history.
Silbert told the paper that on at least 15 occasions between February and October of last year, Lay returned Enron shares to the company to repay a $4 million credit line. Every time he repaid the loan, Lay reborrowed the money and used it to prop up the collateral backing his other investments, according to the attorney.
The attorney told the Times that Lay's credit line was raised to $7.5 million, but that he didn't know if the CEO still owed money on the debt.
Another of Lay's attorneys, Robert S. Bennett, previously disclosed that the CEO used stock to repay a loan shortly after a company vice president, Sherron S. Watkins, warned him that the company could be devastated by accounting scandals. The Times said Silbert also acknowledged the Aug. 21 stock sale but added that Lay exercised options to buy 68,000 shares in late August and still holds those shares. 
|
|
|
|
|
|
|
