Professor Bainbridge...on law, politics, religion, culture & food

So, the fact that Lay ran the board of directors, which reviewed and blessed the Fastow deals, should not be taken as an indication that Lay understood what he was voting to approve?

Efforts at rehabilitating Ken Lay would be more persuasive if they would honestly address his worst behavior, like his 8/24/01 interview with BusinessWeek.  BW asked him: “Q: There has been some concern among investors that perhaps there is more to [Skilling’s] resignation than meets the eye, perhaps accounting or other issues that have yet to come to light. Is there anything more?” Lay did not answer along the lines of, “While I am relatively well informed about Enron at a high level, it is unlikely that I would have detailed information on many of Enron’s transactions,” as Professor Brickley would have it.  Instead, he said: “A: There are absolutely no problems that had anything to do with Jeff’s departure. There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem issues. The company is probably in the strongest and best shape that it has ever been in.

There are no surprises. We did file our 10-Q [with the Securities & Exchange Commission] a few days ago [Aug. 14]. And, if there were any serious problems, they would be in there. If there’s anything material and we’re not reporting it, we’d be breaking the law. We don’t break the law.” http://www.businessweek.com/bwdaily/dnflash/aug2001/nf20010824_288.htm

That certainly isn’t the picture one gets from The Smartest Guys in the Room, which portrayed Ken Lay as more interested in the perks of being chairman of a large corporation than actually keeping informed about anything that was going on at the company.  He came back as CEO after Jeff Skilling left because no one else would take the job but he wasn’t particularly effective at staving off the looming disaster.  It’s debatable whether he even realized how bad things were before the point where everyone knew.  It’s hard to believe that a strong, effective CEO could not, in a few weeks, have figured out what was wrong at Enron at that stage, even if fixing it was beyond anyone’s abilities.

"he performed this role with reasonable diligence”

So Lay was reasonably dilligent, but failed to discover inhouse fraud at a level that totally destroyed Enron?  Tell me again Professor why shareholders are too ignorant to provide a constructive advisory opinions?

Ken Lay actually had many admirable business skills and talents, but that does not change his overall disasterous failure at Enron.

If one goes by the account in The Smartest Guys in the Room, the guy primarily responsible for the fall of Enron was Jeff Skilling, though Ken Lay, as chairman of the board, has to bear ultimate responsibility for the board’s choice of Skilling as CEO.

Guess no one’s reading the article.  It’s whole point, it would seem, is to challenge the conventional misinformation that informs all of the comments here.