Lay Me Down in the Cold Cold Ground

Former Enron CEO Ken Lay is dead, felled by a heart attack while vacationing (?) in Aspen. The Houston Chronicle insta-obituary includes this fascinating factoid:

Lay took a job in Houston in 1965 as a senior economist at Humble Oil…

Those early lessons really stuck, huh?

You can read Michael Lynch's 2002 wrap-up of the Enron scandal here. Gene Callahan and Greg Kaza's hymn to one of Enron's money-making methods is here.

Comments

[Thomas Paine's Goiter]

Ken Lay is probably in Bali right now

[P Brooks]

Let that be a lesson to you, kiddies: no mixing margaritas in the hot tub. The blender, like the toaster, is not a bath toy.

[Clean Hands]

Resquiat in pace, you blight on the good name of free markets. I hope that Adam Smith is kicking Lay's balls up into his windpipe in Hell right about now.

[happyjuggler0]

Ok, how long will it take for conspiracy theorists to say you'd have to be naive to think it was a genuine heart attack?

I suspect there may be some Ken Lay parties this weekend in Houston amongst the people he really screwed over with his arrogant fraud.

[Clean Hands]

Ken Lay is probably in Bali right now

Maybe we can get a postmortem head shot on him a la Qusay, Uday and Musab? That'd stop the conspiracy theorists.

Of course, there's the other side of the conspiracy-theory coin, too. As RAH observed, "In the end, all forms of death can be classified as 'heart failure.'"

[SR]

"Ok, how long will it take for conspiracy theorists to say you'd have to be naive to think it was a genuine heart attack?"

I thought of the conspiracy angle literally the second I read the headline.

[Brian]

Well, at least they made an effort this time. It wasn't the old "suicide" by two bullets to the back of the head.

I wonder if he'll have a secret grave to avoid dancers and people taking a leak on it.

[Russ R]

Heart failure? I doubt it. Ken Lay had no heart.

No wait... it was Daniel Fastow who had no heart.

Ken Lay had no brain... at least, that was the jist of his legal defence.

And to round out the analogy, would it be fair to say that Jeff Skilling had no courage?

[Timothy]

Sign me up for the wizzing on Ken Lay's grave tour.

[Jon H]

Kenny Boy is probably defiling 73 virgin balance sheets right now.

[ed]

I hope that Adam Smith is kicking Lay's balls up into his windpipe in Hell right about now

Adam Smith is in Hell?

[Lamar]

Ken Lay and free markets. Is the love affair over, or are we pregnant and getting married?

[Timothy]

Kenny Boy is probably defiling 73 virgin balance sheets right now.

Who would want to have bad, introductory accounting 73 times?

[ChicagoTom]

I thought of the conspiracy angle literally the second I read the headline.

Sadly, so did I.

[Jeff P.]

In Hell, Ken is currently manipulating the Brimstone Futures market, tweaking the numbers on projected Hellfire production, and cooking the Books of Lost Souls.

In other news, Damnation & Perdition are up two and a quarter points in heavy trading...

[Jeffrey Skilling]

Lucky Bastard.

[sage +P]

I think they should just stick a bone up his ass and let the dogs drag him off.

[Clean Hands]

Adam Smith is in Hell?

No, he just volunteered to take this special assignment. Heh. The Invisible Hand strikes again.

[Dogboy]

I would contend that Ken Lay was a much better man that any of the previous posters.

[Clean Hands]

Better how, Dogboy?

What is the measure of a man, if Kenneth Lay is your paragon?

[Billy Ray]

Say, does anyone else find it funny that Kim Jong Il couldn't get his Taepodong-2 up?

[Dogboy]

"What is the measure of a man, if Kenneth Lay is your paragon?"

You confuse the word "paragon" with the phrase "a much better man than any of the previous posters" -- a common mistake of the self-righteous.

[Clean Hands]

Okay, Dogboy, then what did you mean?

[madpad]

Say, does anyone else find it funny that Kim Jong Il couldn't get his Taepodong-2 up?

I thought he got it up...he just couldn't keep it up.

[Clean Hands]

And if failing to commit massive fraud that put a blot on the concept of a free market system makes me self-righteous, then I joyfully embrace the label.

Ken Lay's actions have been used - and will be used further in the future - to take many actions iniminical to the free function of markets. Criticism of the man for his record of fraud and theft is hardly "self-righteous."

Since you think he's a "better man" than the posters here, please do elaborate so that we may be enlightened as to our shortcomings.

[madpad]

You confuse the word "paragon" with the phrase "a much better man than any of the previous posters" -- a common mistake of the self-righteous.

and you confuse a direct question to your provacative statement as an opportunity to change the subject. That's a common mistake of the self-centered, self-diluded AND self-righteous.

[Jon H]

"Who would want to have bad, introductory accounting 73 times?"

I never said Lay was in heaven.

I suspect after he's done with the balance sheets, the soul of Andersen Consulting will feed him through a shredder.

[s.m. koppelman]

His body should be burned for electricity, with the value of the generated power credited to California's grid.

[P Brooks]

Better at what, Dogboy?

Oh, wait- I know. A GODFEARING, righteous Kennyboy wouldn't gloat at the pathetic (I don't think he was pushed, I think he jumped) end of a man who was either a ridiculous, imbecilic dupe or a larcenous conniver who didn't have the backbone either to say "I did it, and I'd do it again," or walk upright into the prison cell that he so richly deserved.

[Ayatollah Usoe]

The failure of Enron is the free market working. No one is now throwing money at its failed schemes. Contrast that to a non-market failed scheme: Amtrak, where we continue to involuntarily fund the government's dreams that can never succeed.

[madpad]

The failure of Enron is the free market working. No one is now throwing money at its failed schemes. Contrast that to a non-market failed scheme: Amtrak, where we continue to involuntarily fund the government's dreams that can never succeed.

Amtrak losses: $1.3 billion per year

Enron Losses: $60 billion in 1 year. Also tied to World com & Tyco accounted for a 22% dip in the Dow. Thousands of employees pensions gone and immeasurable negative impact in market trust by consumers.

I'm not defending Amtrak...but it's not even on the same scale as Enron.

[madpad]

The failure of Enron is the free market working...Contrast that to a non-market failed scheme...Amtrak, where we continue to involuntarily fund the government's dreams that can never succeed.

Amtrak losses: $1.3 billion per year

Enron Losses: $60 billion in 1 year plus thousands of employees pensions gone and immeasurable negative impact in market trust from consumers.

I'm not defending Amtrak...but it's not even on the same scale as Enron.

[Johnny]

Lay took a job in Houston in 1965 as a senior economist at Humble Oil...

Those early lessons really stuck, huh?

Maybe I'm confused, having actually read Adam Smith. What did Ken Lay do that indicates he didn't remember his "econ 101".

I remember being in grade school when I first came across a some of his writings on my uncles bookshelf...perhaps I missed something, but Adam Smith would not have been surprised to meet Ken Lay, he describes the behavior as practically promised in a capitalist system.

It was reading Smith that gave me the first clue that there were different "market" based systems. I think Mr. Smith would have been glad to reiterate that when capitalists get together, the assumption that they would scheme against the "freedom" of the market would be inevitable.

Here is a rather infamous but related quote from his "Wealth of Nations":

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Most capitalists I know, vs. free marketers for instance, believe in a trade system run from relatively centralized bureaucracies tightly affiliated with the government, staffed by an elite managerial class who produce little, but guide production in a fairly paternal manner, towards the purpose of controlling the market. Looser indeed than communism, but hardly free markets.

It strikes me that Adam Smith would merely say, "Told you so".

Ken Lays mistakes fall not into the category of misunderstanding his "econ 101", nor did he misstep in his application of capitalist principels, merely that he gambled big and lost. It all would have been a different story had he won. And I would have heard everyone talking about the victory of deregulation (there was no true deregulation, just a shifting of regulations).

But, when the chips were counted, Lay came up short, forcing investigations.

Balls on standard capitalist as far as I can tell.

(of course I believe modern capitalists, like communists wish to control the markets, not free them.)

[John]

As the big three at Enron go, Lay is probably a distant third in evilness behind Fastow and Jeffrey Skilling, not that Lay isn't a first class crook in his own right. Skilling, Lay and Fowstow, are what they are, single cell organisms out to steal your wallet or whatever else isn't nailed down. It doesn't excuse them, but the fact is that crooks are a constant in any human Endeavour.

The people who really ought to take the heat for Enron as much as Skilling or Lay, are the lawyers, accountants and board members who stood idly by and let Skilling, Fastow and Lay loot the company. Arthur Anderson and Vinson and Elkins are supposed to be fair arbiters and were supposed to alert investors and the board of directors long before Skilling and company could do any real damage. Fat chance. They took their fat checks from Enron and played see no evil hear no evil to all of Lay and company's shenanigans. What about the board of directors? How is that they hired Lay in the first place, considering that he was already a known crook from the old Valhalla energy deals in the 1980s? Again, just like Vincent and Elkins and Arther Anderson, the board took their checks and didn't care. As far as I am concerned, those people ought to be going to jail for just as long as or longer than Fostow, Lay and Skilling. Don't forget of course the "whistleblowers" made famous by the media. Well, never reporting anything to the authorities as you watch the CEO and CFO of the company steel millions of dollars and ruin the company only to write a couple of CYA memos so that you can get on the cover of time when you crawl out of your hole after the whole thing falls apart, is not being a whistleblower much less anything to be commended.

[P Brooks]

"...a trade system run from relatively centralized bureaucracies tightly affiliated with the government, staffed by an elite managerial class who produce little, but guide production in a fairly paternal manner, towards the purpose of controlling the market."

I believe that was Mussolini's model. And that Texan... you know the one. His name was.... um, Perot. The Libertarian candidate. Hahahahahahahahahahahaha!

[Mo]

While theives, like Lay, may be a natural side-effect of capitalism. They do serious damange to it. They cause people to desire expensive and sometimes pointless regulation. The reduction of trust in the marketplace increases risk premiums, thereby making capital more expensive. Corporatists rant and rave about the cost of government to the economy and avoid the fact that these shenanigans do the same thing.

[John]

MO,

The accountants, board of directors and lawyers are supposed to protect the system from thieves. It is their failures that are the real story.

[Lamar]

John,
Lawyers make money when you do wrong. You're asking people who make money from wrongdoing to protect against that wrongdoing? That's just bizarre.

[Dogboy]

"Oh, wait- I know. A GODFEARING, righteous Kennyboy wouldn't gloat at the pathetic"

Why so tense dude? Hit a nerve? Sure sounds like it. Just take a deep breath...exhale...take another breath...exhale...

[John]

Lamar,

Lawyers get paid to represent the company not the individual. A corporate counsel has the ethical duty to report wrong doing. There is nothing bizare about it. That is how the system works. Vincent and Elkins knew this but weaseled out of it by not looking for the wrong doing. They ought to be held accountable just as much as Arther Anderson was.

[John]

Lamar,

Lawyers get paid to represent the company not the individual. A corporate counsel has the ethical duty to report wrong doing. There is nothing bizare about it. That is how the system works. Vincent and Elkins knew this but weaseled out of it by not looking for the wrong doing. They ought to be held accountable just as much as Arther Anderson was.

[Clean Hands]

You still haven't answered the simple question, Dogboy. What makes Kenneth lay our superior in your estimation.

[Clean Hands]

You still haven't answered the simple question, Dogboy. What makes Kenneth lay our superior in your estimation?

[Lamar]

John,
"...corporate counsel has the ethical duty to report wrong doing." Only future wrong doing, and it isn't clear how this comports with attorney-client privilege.

"There is nothing bizare about it. That is how the system works. Vincent and Elkins knew this but weaseled out of it by not looking for the wrong doing." I submit that the fact Vincent and Elkins got off the hook shows that your version of how the system works isn't accurate. They weren't held liable because lawyers aren't held accountable for their client's crimes. That is how the system works. And, of course, by citing (even if incorrectly) to an "ethical duty", you prove my point. Rarely, if ever, are "ethical duties" made into law unless a clear financial incentive exists that is against public policy. Fast forward to my argument: Lawyers rarely rat out their clients, because then they have no clients.

[happyjuggler0]

Mo,

Perot wasn't the Libertarian candidate. If memory serves his party was the Reform Party.

[happyjuggler0]

Oops,

Not Mo. It was P Brooks at 1;59pm. Sorry.

[happyjuggler0]

Perot wasn't the Libertarian candidate. If memory serves his party was the Reform Party.

That was supposed to be directed at P. Brooks' comment at 1:59 pm. Sorry mo.

[Tasmanian Devil]

"Why for you bury me in the cold, cold ground?" is the better quote, if you ask me. I won an Emmy for that one.

[John]

Lamar,

You are confusing who the client is. The client is the corporation, not the individual. If an officer of a corporation is looting the company, the lawyer has the ethical duty to report that wrong doing. He is not the CEO's lawyer. He is the corporation's lawyer. That means that when the individual's and the company's interest part ways, the lawyer goes with the company not the individual. Once Lay and company started acting against the corporation's interest, Vincent and Elkins should have told them to get private counsel and then informed the board of directors and SEC and law enforcement of everything they knew. That is not breaking client confidences since they are acting for the corporation not the individual.

[John]

Lamar,

You are confusing who the client is. The client is the corporation, not the individual. If an officer of a corporation is looting the company, the lawyer has the ethical duty to report that wrong doing. He is not the CEO's lawyer. He is the corporation's lawyer. That means that when the individual's and the company's interest part ways, the lawyer goes with the company not the individual. Once Lay and company started acting against the corporation's interest, Vincent and Elkins should have told them to get private counsel and then informed the board of directors and SEC and law enforcement of everything they knew. That is not breaking client confidences since they are acting for the corporation not the individual.

[penniless]

Heart attack... he got off light.

[Lamar]

John, it's a little more complicated than that, and you know it. Where do conversations with Lay end and conversations with the CEO of Enron start? What if blaming Ken Lay doesn't absolve the company, is that attorney-client privilege because your client's interests are at stake? Are you familiar with the business judgment rule? Have you had success exposing senior management of your clients? That's why your scenario with lawyers reporting behavior against "the best interest of Enron" is wasted type. Regardless of what in my opinion is your idealistic vision, lawyers who rat out the senior executives of their clients (better wording for ya?) don't have clients anymore. It's the same thing with Arthur Andersen, except accountants can't hide behind the business judgment rule, whereas lawyers can. Hey, I'm only interpreting how things worked out, and the Enron attorneys weren't liable for anything. That is the reality of it. All I see in your posts is how things "ought" to be, and very little of how they are.

[John]

"Regardless of what in my opinion is your idealistic vision, lawyers who rat out the senior executives of their clients (better wording for ya?) don't have clients anymore. It's the same thing with Arthur Andersen, except accountants can't hide behind the business judgment rule, whereas lawyers can. Hey, I'm only interpreting how things worked out, and the Enron attorneys weren't liable for anything."

You hit the nail on the head. Scumbags like Anderson and Vincent and Elkins get hired to be yes men not honest accountants or lawyers. Looking out for shareholders does not get you any clients. Looking the other way at fraud and abuse by CEOs does get you clients. That may be reality, but it doens't make Vincent and Elkins any less accountable for overlooking the misdeeds and not acting in the best interests of the clients, who are the shareholders, not the CEO.

" Where do conversations with Lay end and conversations with the CEO of Enron start"

There are never conversations with Lay. As a corporate attorney, Lay is never your client, the shareholders are. That means you only talk to Lay qua CEO, not as an individual. Ratting him out to the SEC by definition cannot break confidentiality.

[smacky]

Ken Lay is probably in Bali right now

That is more or less exactly what I thought as soon as I saw the headline. I really think he is there, or at some comparable foreign country that has few or no fraud/financial laws.

[John]

One more thing,

The Business Judgement rule does not cover outright fraud on the part of a CEO of a publiclly traded company. The board still has a duty of care and good faith to the shareholder. Hiring a known crook like Lay and then letting him and Fastow commit the crimes they committed should overcome the presumption given to boards of directors. In reality yes the business judgement rule has been interpreted to mean that crooked, neglectful and incompetant boards are let off the hook. That, however, does not make it right. It is having a too broad interpretation of the business judgment rule that gave us Enron as much as anything. They should have changed that rule and started holding boards responsible rather than the mess that it SARBOX.

[P Brooks]

happyjuggler-

Oops. When Perot was running for President, I drove, on a daily basis, past a house with political signs all over the yard, including "Perot" signs. There were also "Vote Libertarian" ones which were large and prominently displayed, and it seems I incorrectly linked Perot and the LP. I was utterly baffled, at the time, by the thought that any libertarian could harbor the faintest belief that Perot was "one of them."

[Isaac Bartram]

P Brooks

The Perot campaign, like the LP attracted a lot of disenchanted voters. While these voters may lack ideological clarity, they are certain of one thing, the big guys are wrong so we need to look somewhere else.

It doesn't matter so much what the other guys stand for. It's only important that they're not "THE BIG GUYS".

When there is a lot of dissatisfaction with the mainstream look for third parties to gain. When things are hunky-dory the support recedes.