Enron's Lay ends testimony

HOUSTON, TEXAS - Former Enron Corp. chief Kenneth Lay wrapped up his testimony recently, proclaiming he was innocent of any crimes at the now-ruined company that he built into an international energy powerhouse.

"I loved Enron very much, and I loved Enron's employees very much," the former chairman and chief executive told the jury. "I think the most painful thing in my life was watching Enron have to go into bankruptcy."

Lay, 64, is on trial in federal court alongside former CEO Jeffrey Skilling, 52, on charges that they lied to investors to cover up Enron's faltering financial health in the months before it collapsed in December 2001 into the largest U.S. bankruptcy of its time.

Lay headed Enron from its creation in 1995 out of the merger of two pipeline companies, and aided by Skilling, created a trading giant that altered the natural gas business.

His relaxed, affable manner won him friends among the nation's elite, including former President George H.W. Bush and President George W. Bush.

But his folksy charm disappeared under arduous questioning by the prosecution, which battered him with repeated queries about numerous warnings on dodgy accounting that went ignored and his sale of $70 million (38 million pounds) of Enron stock during the company's final year.

Prosecutor John Hueston rapped Lay in his final round of questioning, charging him with shrugging off any responsibility for Enron's demise.

"You have a long list of people to blame for Enron's collapse, and it gets longer the longer you testify," Hueston said.

Hueston also returned to questions about an investment Lay made in a photo company that derived most of its business from Enron. Lay acknowledged the investment may have been a breach of Enron's ethics code but said his loyalties to Enron never wavered.

"Rules are important, but you should not be a slave to rules either," Lay replied.

Lay is charged with six counts of conspiracy and fraud and Skilling is charged with 28 counts of conspiracy, fraud and insider trading. Both men face decades in prison if convicted.

Defence lawyers called a series of high-profile character witnesses to the stand, including former Houston Mayor Bob Lanier; retired U.S. Navy Admiral George E.R. Kinnear Jr.; and Drayton McLane, Jr., the owner of the Houston Astros, the local Major League Baseball team.

Lanier called Lay a "visionary" whose work on civic projects helped build two sports stadiums in Houston, and he said Lay would have made a good mayor of the city.

"He was a factor, a constructive force in just about every civic event when I was mayor," Lanier said.

Lay's defence team also questioned the former executive's lawyer, Martin Siegel, who represented Lay in his efforts to reach a settlement with Enron's creditors to pay back $7.5 million in loans he owed the company.

But prosecutors pounced on Siegel, who admitted Lay never attempted to pay back the money until he was sued by the creditors' committee for $80 million during Enron's bankruptcy. That proposed settlement would have returned annuities to Lay and his wife that the couple had sold to Enron years earlier for $10 million, as well as insurance policies.

Lay has contended that prosecutors blocked a settlement with the creditors' committee two years ago under which he would have repaid the $7.5 million to Enron.