At Enron trial, jury sees a testy Ken Lay

He was one of Houston's great men of industry, one of its finest city boosters and most generous philanthropists, a friend of American presidents, who doted over the city like a benevolent grandfather.

So it came as something of a surprise last week when Kenneth Lay, taking the risky step of testifying in his own defense during the Enron trial, projected an image short on pink-cheeked affability.

What emerged on the stand was a tough and controlling Enron executive - a man who seems as if he never had to explain himself to anyone, until now. Mr. Lay's testimony, which is likely to conclude Monday, may not have had the positive effect his defense team had hoped for - and may even have hurt his cause and that of co-defendant Jeffrey Skilling, the energy giant's ex-CEO.

"Based on his demeanor on the witness stand, it will be easy for jurors to visualize him as a no-nonsense disciplinarian who had complete control over his subordinates ... instead of a man preoccupied with civic activity, philanthropy, and out of the loop with respect to the nuances inside the company," says Christopher Bebel, a former federal prosecutor and economic-crimes expert in Houston.

For the most part, Lay's time on the stand has been arduous. He has argued with the prosecutor, irritated the judge, and even showed annoyance with his own lawyer in front of the jury.

Those who know Lay say it may be because he's never had anything in his life but success - and this trial is an unprecedented setback with which he is unprepared to cope.

It also may be because he has not come to grips with the reality of the situation, others say.

"It's almost as if Lay believes it's six years ago and Enron hasn't gone down. When he's testifying, it's sort of like listening to a time warp," says Gerald Treece, assistant dean of the South Texas College of Law in Houston. "He's acting like it's the summer of 2000, and it ain't."

During questioning by his own lawyer last week, Lay introduced his family and friends to the jury, spoke about his humble beginnings as the son of a Baptist minister in rural Missouri, described his "hire the best people and then get out their way" management style, and explained why he felt it was important to give so much time and money to the community.

He frequently projected a controlling side, an image which up until now has rarely been seen in public. When he didn't think the questions were on-track, for instance, he would interrupt his lawyer, George "Mac" Secrest, or ask him, "Where are you going with this, Mr. Secrest?"

"In Lay's World, Lay is still the boss," wrote Houston Chronicle business columnist Loren Steffy. "His attorneys, the professionals he's paid millions to defend him, are subordinates to be ordered around and, if necessary, reprimanded in public."

The mid-trial loss of Lay's lead attorney, Michael Ramsey, who is recovering from surgery, may have something to do with Lay's difficulty on the stand, Professor Treece suggests.

Mr. Secrest is a well-respected Houston appellate attorney, but doesn't have much pizzazz or charisma in court, legal analysts note. He and Lay appeared out of sync through most of the direct examination and didn't seem as well prepared as Mr. Skilling and his lawyer.

Because of his reputation at Enron, many expected Skilling to come across as arrogant and ill-tempered while testifying.

"But Skilling came across as a non-threatening Rice [University] economics professor and Lay wasn't even handling his direct [examination] very well," says Treece.

Ironically, legal experts say, it may be Lay who is now endangering Skilling, whose time on the stand recently went far in softening his own image.

"The fact that Lay has come across so poorly has a spillover effect in that it also diminishes the prospects that Skilling will be acquitted, because there is a significant chance that they will rise or fall alongside each other," says Mr. Bebel.

Lay's uneasy rapport was no doubt visible to the jury, says Bebel - especially after Skilling's direct examination went so smoothly.

Both Lay and Skilling are charged with conspiracy, fraud, and insider trading, and both have vehemently denied the charges in court.

Last week, Lay called Enron's bankruptcy at the end of 2001 a "classic run on the bank" brought about by the deceit of former Chief Financial Officer Andrew Fastow, who was stealing from the company; short sellers who set their sights on Enron that year; and a series of unsympathetic articles about the company in The Wall Street Journal that October.

Those who know Lay say he was addicted to Enron, the company he founded, and he acknowledged in court that the bankruptcy affected him more than the death of family members.

"Ken Lay was such a paragon of virtue, at the center of all civic leadership in this city. He represented the Houston of the future," says Stephen Kleinberg, a sociology professor at Rice University in Houston. "When Enron fell, there was this deep sense of betrayal, like the city had been duped."

Now, says Dr. Kleinberg, it's been more than five years and the city has moved on in many respects. Lay, however, "doesn't seem to understand how far he's fallen or how much his world has changed."