How Lay will play to a hometown jury
The former Enron CEO hopes his charisma and charity will outshine his shadow of alleged corruption in Houston.
HOUSTON — Before Enron collapsed in 2001, Ken Lay was one of the best-known and best-liked figures in Houston. People lined up at charity events to have their photo taken with him. They asked for autographs in local restaurants and pointed him out at ball games.
Today, he may be even more prominent - especially with last week's 11-count indictment for his role in one of America's largest corporate bankruptcies. Many former employees have a low reservoir of sympathy after losing their retirement savings in Enron's collapse.
But what of his popularity?
Unlike many CEOs, Mr. Lay used his position at Enron to create enormous goodwill for his adopted city, giving away millions to local charities, fighting for social causes, and attracting a bright and successful workforce.
"There is a very complex mixture of feelings about Ken Lay here in Houston," says Stephen Klineberg, a sociology professor at Rice University. "There is a sense that this is one of the great heroes of Houston, the epitome of a business civic leader. But he had this terrible fall from grace, in large degree through his own doing. So while there is residual gratitude to him, there is also a sense of betrayal."
At a press conference after his arraignment last week, Lay was in top form - seeming more at ease than ever before. He says he wants a speedy trial, within the 70 days granted him by law.
But what kind of jury will he get in a city with such mixed emotions - a city where so many residents have felt the impact of the company's collapse and, at the same time, Lay's generosity?
"In Houston, virtually everybody knows someone who's been directly affected by Enron," says Dan Hedges, a Houston defense attorney and the former US attorney here. "But he will probably be able to find an impartial jury. Houston is an enormous and diverse place."
Gerald Treece, dean of the South Texas College of Law in Houston, disagrees.
"It's going to be hard to find a jury that can be fair and unprejudiced on the question of Enron," he says. "People already have such strong opinions."
Some people find it impossible to believe that this ex-CEO did not know what was going on at his own company. While others say he was more of a figurehead, far removed from the day-to-day activities.
Still, no one denies his tremendous community support - and that will help when picking a jury, experts say.
"Lay was more of the PR fella for the company, and a number of Houstonians still have sympathy for him," says Professor Treece. "He gave generously to charities, was really involved in this community, and was genuinely a good guy."
Indeed, Houston is a city where a fall from grace does not necessarily equate to being an outcast. Lay's lawyer, Michael Ramsey, has hinted that he will ask for a change of venue. "About 80 percent of the people here have some opinion one way or the other about Enron," he said at a press conference last week.
If the trial were to change venue - a long shot, experts agree - a move wouldn't necessarily be beneficial since the company's collapse had national implications.
"Across the country, how many pension funds were affected because of Enron and how many 401(k)s tanked?" says Alan Lieberman, a white-collar defense attorney in New York and former assistant US attorney. The Enron story is not just a Houston story; it's a national story."
Mr. Lieberman is confident that the judge in the case will be mindful of the media saturation and allow Lay's attorneys to spend more time with the jury pool.
For his part, Lay plans to be more available to the public - a move to remind people of the good he's done, say experts. In a recent press, for instance, "he seemed very confident and didn't appear to have done anything wrong. And that will have a positive effect on the population," says Thomas Ajamie, a Houston lawyer. "A lot of people in this city still like him and think he might have been duped by the guys around him."
But key to winning will be separating his case from that of former chief executive Jeffrey Skilling and former chief accounting officer Richard Causey - who don't have the same relationship with the city. Mr. Ramsey has already indicated that he wants Lay's case tried independently.
For a long time, former Enron employee Rod Jordan says for a time he believed the charismatic, dynamic Lay was innocent.
"It was hard to believe that he was one of the wrongdoers even after the collapse," says the former energy services division manager. "But once you look at all the facts, you have to come to that conclusion."