Return to Transcripts main page
American Morning
Where is Ken Lay?
Aired February 05, 2002 - 07:05 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: The big question this morning, where is Ken Lay? The former Enron chairman resigned from the company's board last night just as congressional leaders moved to try and force him to show his face at their hearings. But the House Financial Services Committee was unable to subpoena the former CEO to appear this morning. That's because Lay's lawyer would not accept the subpoena, saying he didn't know his client's whereabouts.
CNN congressional correspondent Jonathan Karl joins us on Capitol Hill with more. I know you have a lot to give us a preview of, but does anybody know where Ken Lay is this morning, Jonathan?
JONATHAN KARL, CNN CORRESPONDENT: Well, this is not exactly the case of a nationwide manhunt, Paula. CNN spoke with
Ken Lay's lawyer last night. He said Ken Lay was simply going back to Houston, that the committee actually tried to subpoena him late yesterday afternoon and at that point Mr. Lay's lawyer, Earl Silbert, said I don't know where he is right now, I can't give it to him right now.
They wanted to subpoena him late yesterday to appear today. Mr. Lay's lawyer said that was unreasonable because his client had gone back to Houston, where he lives, after all.
A quote from Mr. Lay's lawyer was, "I did tell him" -- meaning the committee's investigator...
"I didn't know where Mr. Lay is because I don't know where Mr. Lay is every hour of the day. I don't know where Mr. Lay is at every moment." But the lawyer said that Mr. Lay is in Houston and he would cooperate and he would eventually appear before Congress and respond to a congressional subpoena.
Meanwhile, there was a hearing that did take place yesterday featuring William Powers, author of that devastating Powers Report, that looked at exactly what Enron did wrong and who is to blame for some of those partnerships that were set up to conceal Enron's real financial condition. And that, Mr. Powers had some particularly strong words to say about Ken Lay.
(BEGIN VIDEO CLIP)
WILLIAM POWERS, ENRON BOARD OF DIRECTORS: There were failures in the performance of Enron's outside advisers and there was a fundamental default in the leadership of the management. And leadership and management begin at the top with the chairman and CEO, Ken Lay.
(END VIDEO CLIP)
KARL: Now, Paula, Earl Silbert, Lay's attorney, told CNN last night that he had talked with the committee about possibly having Mr. Lay appear February 12 or February 13. But the word he used was to appear. That doesn't mean to testify, because even if he appears, he can invoke, of course, his fifth amendment right not to talk.
ZAHN: So who else do these legislators expect to hear from today?
KARL: Well, today you've got somebody who has become somewhat of a regular up here, Mr. Bernardino, the head of Andersen Consulting. Andersen accounting will again be up here. And also we will hear again from Mr. Powers and again from William Pitt, the chairman of the SEC.
The more interesting hearings will probably be on Thursday, and that's when you'll see two of the real critical players in all this come before Congress, or at least are expected to come before Congress. One, Andrew Fastow, the chief financial officer who was singled out for most of the blame in that Powers Report, is expected to be before the House committee, but also expected to take his fifth amendment. And then Jeffrey Skilling, the former CEO, is also expected. And his attorneys still say that he is going to talk.
ZAHN: All right, Jonathan Karl, thanks so much for that preview. Appreciate it very much.
Up front this morning, Enron employees looking for justice. The Reverend Jesse Jackson has taken up the Enron cause and televised to Washington with a group of former Enron employees hoping to attend the hearings and hear their former chairman speak. But it has been a disappointing couple of days for them so far.
Here now are two from the group, Debra Johnson and Katherine Benedict, both former Enron employees. Welcome to A.M. Good to see both of you.
KATHERINE BENEDICT, FORMER ENRON EMPLOYEE: Good morning, Paula.
DEBRA JOHNSON, FORMER ENRON EMPLOYEE: Good morning, Paula.
ZAHN: Good morning.
So, Katherine, I'm going to start with you this morning.
BENEDICT: Yes, ma'am.
ZAHN: I know both you and Debra worked for Enron for some seven years. You obviously lost your jobs.
BENEDICT: Yes, ma'am.
ZAHN: You're both looking for work right now and you're lobbying Congress for some changes. Before we get to some of the specific things you're calling for, I wanted to replay a very small part of what the chairman of the Securities and Exchange Commission had to say about some of what you're calling for.
Let's listen.
BENEDICT: OK.
(BEGIN VIDEO CLIP)
HARVEY PITT, SEC CHAIRMAN: The Enron debacle is tragic and too many Americans have felt its consequences. Innocent investors were betrayed by abuses of our system of disclosure and accounting. Most tragic are investors who entrusted some portion of their life savings to a company that purported to be profitable.
(END VIDEO CLIP)
ZAHN: Katherine, what is one specific change that the government could implement at this point that would have changed, that would have saved you from what you went through?
BENEDICT: Well, we're looking at bankruptcy laws that need to be changed. The employees as shareholders in the company, also as creditors, were at the back of the line. So if the company were to go into total liquidation, we probably wouldn't see any money. And we're speaking here today, we're representing all former and current Enron employees, severed Enron employees as well as retirees who have lost pretty much everything.
ZAHN: Debra, you lost...
BENEDICT: And...
ZAHN: You lost your whole lifetime savings? Were all your savings tied up in your 401K?
JOHNSON: I did. I did. I lost everything. I lost everything in my 401K. I'm sitting now with a son that's at Hampton University. Tuition was due 1st of January and I'm on hold right now.
ZAHN: So in the meantime you obviously are fighting for these changes that Katherine just talked about. When it comes to 401Ks, Debra, what do you think the government should do? I mean obviously we know that Enron officials, according to Enron employees, encouraged you to keep your savings in those 401K plans. But ultimately it was you, as the individual investor, that could have pulled the plug. Why didn't you earlier on?
JOHNSON: Well, the stock was at a great price and I thought that if I were to leave it there that I would get, you know, a better return on it and that it would be more money for me to be able to do the things that I needed to do, be it education for the continuation of my son along with, you know, maybe looking for retirement a little earlier.
ZAHN: Katherine, what about you?
BENEDICT: I agree with Debra. We believed in our company. We loved Enron. The company kept telling us over and over we're growing by 20 percent every year and that's, it's a, you know, if your company is growing by 20 percent, you have other mutual funds you can invest your money in. You want to put your money where it can grow the greatest.
And the core businesses were strong. They were making money. So that's what we did. We, all of us put all of our money into our company stock because we had faith in our company.
ZAHN: I wanted to move on very quickly to the stewardship of Enron under Kenneth Lay. We know that his attorney yesterday said Mr. Lay, "firmly rejects any allegations that he engaged in wrongful or criminal conduct."
But here is what Senator Peter Fitzgerald of Illinois had to say about that same Ken Lay.
(BEGIN VIDEO CLIP)
SEN. PETER FITZGERALD (R), ILLINOIS: Wrong. Now, it's theoretically possible that the CEO, Ken Lay, didn't know that something was going wrong beneath him. But these transactions went on for so long with such frequency and were so large that to believe that you would have to conclude that he was the most out to lunch CEO of any major corporation in America.
(END VIDEO CLIP)
ZAHN: What were your perceptions of him, Debra?
JOHNSON: Yes, I agree. He was really out to lunch. But overall, I thought Mr. Lay was a great man. He was highly respected. He is still highly respected in the community. It's just that, you know, bad judgment. He just didn't oversee the things that he needed to for his employees.
ZAHN: Katherine, did you have much contact with Ken Lay when you worked for Enron?
BENEDICT: I actually worked in the public relations department for one year. I was on the 49th floor. Mr. Lay and all the executives, corporate executives, were on the 50th floor. So I was always up there all the time. We'd see him in the elevators. He's a very, very nice man. He was very good to his employees, very well respected, and he's given back to the community so much.
But I have to say, like Debra, he was on the board of directors. He was the CEO of our corporation. He approved every one of those limited partnerships and those transactions. He has to take responsibility and the truth needs to be told. ZAHN: Katherine, do you buy his attorney's story this morning when it came time to subpoena him yesterday his attorney didn't know where he was, didn't know where to find him?
BENEDICT: I don't know. I don't know the situation on that. I just have a feeling that report came out and his lawyers advised him not to show.
ZAHN: All right, well, Katherine Benedict and Debra Johnson, I know this is a tumultuous period of your life.
JOHNSON: Yes.
ZAHN: We wish you luck as you try to get your feet back on the ground and thank you for sharing...
JOHNSON: Thank you.
BENEDICT: Thank you. Thank you very much.
ZAHN: ... both of your stories with us this morning.
JOHNSON: Thank you.
BENEDICT: Take care.
JOHNSON: And we'd like to thank the Reverend Jesse Jackson and the Rainbow Coalition.
BENEDICT: And the AFL-CIO, who are supporting our efforts.
Thank you.
JOHNSON: Thank you.
ZAHN: All right, take care. Thanks again.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
