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. Last Updated: 07/27/2016

Lay Finishes Testimony With Praise for Enron

HOUSTON -- After exchanging some parting shots with his prosecutor, Kenneth Lay finished six days of testimony at his federal fraud and conspiracy trial by professing love for Enron, the company he founded, and the people who worked there.

"I loved Enron very much," Lay said Tuesday in a brief response to the final question from his lawyer, George Secrest. "And I loved Enron's employees very much. I think we built a great company. We changed energy markets around the world."

As he has during more than a week on the witness stand, Lay jousted with prosecutor John Hueston, this time over taking responsibility for the implosion of the once-giant energy trading company.

An accounting professor from the University of Southern California hired by the defense testified that Enron's accounting was sound.

Jerry Arnold spent much of Tuesday afternoon on the stand discussing accounting regulations in detail and offering an analysis of Enron's financial reporting. He focused on the third quarter of 2001, when Enron reported $638 million in losses and a $1.2 billion reduction in shareholder equity related to failed broadband and water-trading ventures as well as the unwinding of so-called Raptors, off-the-books financial structures backed by falling Enron stock.

The government alleges Lay knew many Enron assets were overvalued, that losses were coming and that he misrepresented this to the public.

Arnold said Enron's accounting and financial reporting was proper.

He acknowledged that he was paid more than $1 million for his work.

"I'm here to provide my expertise on facts and circumstances," he said, defending the expenses.

Earlier, Lay continued to cite deceit by former chief financial officer Andrew Fastow as being "at the heart" of Enron's collapse.

"Your list of people to blame and events to blame did not include yourself, did it, sir?" Hueston asked him.

"Did I make mistakes?" Lay replied. "I'm sure I did, Mr. Hueston. I had to make real-time decisions based on the information I had at the time."

The pair disagreed over other testimony, like that of former company treasurer Ben Glisan, who pleaded guilty to conspiracy and testified that Lay and his co-defendant, former Enron chief executive Jeffrey Skilling, knew financial structures that Glisan and Fastow had created were hiding losses at Enron.

Told by Hueston that Glisan had no reason to lie, Lay replied: "He did not tell the truth. That I know."

Under questioning from Secrest, Lay denied prosecution suggestions last week that he was trying to tamper with witnesses when he tried to speak with them. "I was trying to see if they would meet with my lawyers," Lay said.

He said he suggested through a woman who once worked at Enron that he and prosecution witness Vince Kaminski "have a cup of coffee."

Lay and Skilling, who testified earlier in a trial now in its 14th week, are accused of repeatedly lying to investors and employees about Enron when they allegedly knew the company's success stemmed from accounting tricks.

The two men counter that no fraud occurred at Enron other than that committed by a few executives, like Fastow.

Following Lay to the stand was Martin Siegel, an attorney from New York working for Lay in a related Enron case, who said his client had been trying to pay off $7 million he owed Enron from a 2001 draw from a company line of credit, but had been hampered by Hueston, who never responded to documents sent to him.

Lead prosecutor Sean Berkowitz, however, suggested the impediment was Lay's "horse trading" to retrieve from Enron an insurance policy worth more than $1 million in exchange for the repayment of the loan.

Preceding Arnold, Lay had several character witnesses testify for him, including former Houston Mayor Bob Lanier and retired Admiral George Kinnear, who met Lay in the 1960s when both were teaching at George Washington University. Somewhat oddly, both described Lay as "straight as a string."

Lanier, who served six years as mayor of Houston in the 1990s, said he thought Lay would have been a good mayor.

The Reverend William Lawson, a retired Houston pastor and civil rights leader, discussed his respect for Lay.

But when asked under cross-examination by prosecutor Cliff Stricklin if "even good people can make bad decisions," Lawson replied: "I think there's not one of us in this room for which that is not true."