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2004-07-08

Kenny Boy Surrenders to FBI Following Grand Jury Indictment

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Former Enron chief Kenneth Lay–one of President Bush’s closest Texas allies and a Bush pioneer–is indicted for his role in the collapse of the energy giant and led away in handcuffs. We speak with journalist and author Robert Bryce and Russell Mokhiber of Corporate Crime reporter about the political dimensions of Ken Lay, Enron and the White House. [includes rush transcript]

Former Enron chairman and chief executive Kenneth Lay surrendered to the FBI this morning, a day after we was indicted by a federal grand jury in connection with the 2001 collapse of the former energy giant. After turning himself in, he was taken away in handcuffs.

The criminal charges against Lay are contained in a sealed indictment and will be made public later today when he appears before a magistrate to enter a plea. Civil charges are also expected to be filed by the Securities and Exchange Commission. In a public statement Lay said, "I have done nothing wrong, and the indictment is not justified."

Enron’s collapse in 2001 ended the jobs of more than 5,000 workers and decimated the retirement savings of millions of investors. Federal prosecutors have been trying to prove that corruption at the firm went right to the top for over two years. So far, criminal charges have been filed against some 30 people, including former executives and advisers who have been accused of fraud, conspiracy and insider trading offenses.

Lay is a close friend of President Bush and one of his top financial backers during the 2000 election. After Enron collapsed, "Kenny Boy"–as Bush used to refer to him–became Mr. Lay.

  • Robert Bryce, journalist and author of Pipedreams: Greed, Ego and the Death of Enron. His latest book is Cronies: Oil, the Bushes and the Rise of Texas, America’s Superstate.
  • Russell Mokhiber, editor of Corporate Crime Reporter.

Transcript

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We begin with Robert Bryce, who is a journalist and author of, "Pipe Dreams: Greed, Ego and the Death of Enron." his latest book is, "Cronies, Oil, the Bushes and Rise of Texas, America’s Super State." welcome to DemocracyNow!, Robert Bryce.

ROBERT BRYCE: Hi. Good morning. Thanks for having me.

AMY GOODMAN: Very good to have you. Can you tell us about what Ken Lay is charged with?

ROBERT BRYCE: Well, we don’t know that yet, until the indictment is unsealed but my hunch is going to be given the other indictments in the case that the prosecutors are going to charge him with things that are fairly easily provable when put before a jury. So, wire fraud, mail fraud, insider trading would be, you know, the types of charges that I would expect. Those are the primary charges that were filed against the other primary miscreants in the Enron disaster.

JUAN GONZALEZ: You raise in an article in salon.com that Lay going on trial could really raise a whole bunch of issues depending on what he decides to talk about. You raised, for instance, that he might have very damaging information about a series of key operatives of the Republican Party and supporters of president bush like James Baker or Ralph Reed, Ed Glespy, head of the Republican National Committee. Can you talk about these folks and their relationship to Enron?

ROBERT BRYCE: Sure. What’s remarkable, stepping back and looking at the big picture in terms of Ken Lay is I cannot think in recent history of any individual who was the head of a company that had more and closer ties to a sitting presidential administration than Ken Lay and Enron. Enron was, until a few months ago, George W. Bush’s biggest career patron. So, you know, the catalog of people who are former Enron or worked for Enron that are now either top people in the Republican National Committee or within the administration is long. The U.S. Trade representative, Robert Zellic, worked for Enron. The former secretary of the Army, Tom White, was a major player at Enron. He sold something like $30 million worth of stock in the three years before the bankruptcy. James Baker the Third, the former secretary of state, worked as a lobbyist for Enron on projects in Kuwait, Turkmenistan, Katar and elsewhere where. The current head of the republican national committee, Ed Gillespie, the former head of the R.N.C., Mark Rascicot, worked for Enron. These are ties that go on and on. The question is will Lay, now that the department of justice and the Bush administration is playing hardball with him, will he play hardball back? One final thought on that is, you know, the Supreme Court just heard the case involving Dick Cheney and the papers of the energy task force, well, there is a possibility that Lay’s defense lawyers could subpoena those documents and get them produced.

AMY GOODMAN: We’re talking to Robert Bryce who has written a book on Enron and Ken Lay, and what has happened with its collapse called, "Pipe Dreams: Greed, Ego and the Death of Enron." will Ken Lay turn against George Bush?

ROBERT BRYCE: Well, that’s an open question. I’m not holding my breath. I mean you know, Ken Lay is the ultimate crony. He is one of the people in my latest book, "Cronies," I write about the men who are part of the Bush crony network. All of these men have interconnecting relationships, whether on board memberships, political affiliations, fund raising things. Lay might turn against him. The question is when would he do it, maybe he will wait until he’s in jail and decide to write a book, and then tell us what he knows. You know, I think there are a lot of possibilities. Some people say it will never happen because Lay is a loyal guy and that would be the betrayal of all time, plus, he is hoping to be rehabilitated by the Houston energy crowd over time.

AMY GOODMAN: What could he say about people like Karl Rove, Ralph Reed and others?

ROBERT BRYCE: The interesting thing about reed is why did Enron hire a man who knew nothing about energy regulation in 1997 when at a time when reed had just left the Christian coalition. He needed clients. Karl Rove, by all accounts, went to someone at Enron, who that someone is, we don’t know, and said, would you hire Reed? In fact, Enron did exactly that. Reed got on Enron’s payroll and was immediately inside the Bush, Lay, Rove tent. And Reed stayed there. Having Reed on their team became a critical part of Bush’s then — which was then very much in the plan, which is his run for the presidency. In 1998, all of the ducks were in a row. Reed was on their team and still is.

JUAN GONZALEZ: He is being paid $300,000 a year?

ROBERT BRYCE: No, I think the total payments were $300,000. He had also signed a brand new contract right before that that was going to pay him I think it was $30,000 a month plus expenses. Recall, there are a lot of energy lobbyists who are very well connected and know a lot about the energy business. Ralph Reed knew nothing about the energy business. So, why hire —

JUAN GONZALEZ: Could you talk about the Enron prize that Ken Lay created and was given to other major figures like Colin Powell and shed some light on that.

ROBERT BRYCE: Mikhail Gorbachev. Sure. The Enron prize was a prize that was given to people who were outstanding in their field and had done things for humankind. It was awarded by the James Baker institute for public policy at Rice University. This is something that Lay came up with shortly after he hired Baker to work for him as a lobbyist. The prize was given out whenever Enron felt it was in their best interests and whenever visiting dignitaries might come into town it, was something they could use to, you know, curry favor. What is most interesting about the Enron prize is that it was awarded to Alan Greenspan, the chairman of the Federal Reserve, in November of 2001 at a time when Enron was lobbying Greenspan to intervene to bail out Enron. Clearly, Ken Lay was hoping that the fed would step in and save Enron in much the same way that the fed stepped in and saved long-term capital management in 1998. That didn’t happen. When Greenspan was in Houston, he declined to take the cash prize that came with the Enron prize. He also declined to take the crystal trophy that was awarded with the prize. So, you know, that’s a little — you know, that’s a little arcane perhaps, but it’s all part of the bigger picture about the political influence that Enron had.

AMY GOODMAN: We’re talking to Robert Bryce in Austin, Texas. The issue of James Baker and his connection, very close circle, Ken Lay, James Baker, James Baker and Enron?

ROBERT BRYCE: Sure. Well, the thing that is interesting to me about Baker is that, you know and in my book "Cronies," I think if there’s parts of that book that have really never — still, the mainstream media has not picked up on is how many times Baker Botts and James Baker have been involved in rescuing the administration of either George W. Bush or George H.W. Bush. Baker Botts has played critical roles throughout the rise of the Bush dynasty. It’s fascinating to me that, you know, Baker had these ties to Enron right after the end of first Iraq war. In fact, Baker signed on as a lobbyist at Enron just 33 days after the first Bush administration left office. And immediately, he was going back to Kuwait to lobby some of the same officials that he was dealing with as Secretary of State during the prosecution of the first Iraq War. Now, you know, I know that revolving door has been used many times and it’s a profitable one, I think the question to ask is well, how much was Baker paid? You know, how — because clearly he is one of the most powerful former secretaries of state in America, and I think this is something that would be very much in the interest of the public.

JUAN GONZALEZ: There’s also the issue that you raise of how the bush family used the Enron fleet of airplanes as sort of their private taxi service. Could you talk about that?

ROBERT BRYCE: Sure. Well, Lay was very solicitous of the Bushes whenever there was an opportunity. One of the ways that he curried favor was with transportation. For instance, when the Enron prize was awarded to Colin Powell, they sent a private jet and picked him up and flew him in. Whenever George H.W. and Barbara Bush were flying to Maine, they would go on an Enron jet. During the 2000 campaign, Enron’s jets were used by the George W. Bush campaign more than perhaps any other corporation, save one, during that entire time. The Enron jets were particularly important during the time frame of the Florida recount. You recall during that time, time was absolutely critical. There was no time that could be wasted. So, getting corporate jets to fly key players for the campaign around, whether it was to Florida or New York to Washington or back to Texas, that was absolutely essential. Enron provided those jets whenever the campaign needed them. So, the question is why? You know, what was Enron hoping to get back? What was the agreement?

AMY GOODMAN: We’re talking to Robert Bryce in Austin, Russell Mokhiber, editor of "The Corporate Crime Reporter" in Washington. Can you talk about how the indictment of Ken Lay unsealed today will impact the campaign and what’s going on in Washington?

RUSSELL MOKHIBER: Good morning, Amy. First, I think it’s a political victory for President Bush because despite the fact that we’re seeing the greatest corporate crime spree in history despite the fact that the president, as Robert said, is tied at the hip with big business and specifically Enron and Ken Lay, the president is amazingly succeeded in taking corporate crime off the table in the campaign. I sort of agree — I think I agree with Ken Lay who said to the "New York Times" a couple of weeks ago, if anything, be friends with the Bush family, including the president, has made my situation more difficult because it’s probably a tougher decision not to indict me than to indict me. That’s proven true. Second, how has he taken this off the table? With the help of the Democrats. It would be good — if you go to john Kerry’s web page, click on his issues, click on crime. Not one word about corporate and white collar crime. Not one word. The Democratic and the Republican Party are marinated in corporate criminal money. Your listeners and viewers know about this, because we reported last year on all of the convicted corporate criminals dumping money into both the Democratic and Republican Parties, the reports on the website corporatecrimereporter.com. You will not hear senator Kerry, you have not heard him talking about cracking down on corporate and white collar crime. The president set up this corporate task force and went out and won more than 30 indictments in the Enron case and more in Adelphia and Martha Stewart. Does it make a difference? I don’t think so. Only ten corporate executives have been thrown in jail since Enron filed bankruptcy. Only one from Enron. And if you look at how 17 executives were convicted in a huge fraud, only one went to jail. There are 17 indicted, ten convicted, but only one in jail. The rest get probation and house arrest. They get fines and forfeitures. The broader picture is this Enron cost thousands of employees their jobs, millions of investors money. "The New York Times" put it this way and for a time, forced a nation to question the capital market system. Now, we cannot have the nation questioning the capital market system. So, when you see these indictments of Martha Stewart and Martha Stewart is going to be sentenced next week to jail and Ken Lay and so forth, you are seeing a defense of the capital market system. If we were going to see an attack on the fundamental capital market system, we would see a different kind of prosecution that fundamentally challenged the nature of the corporations. We’re not seeing that. Corporate crime is off the table. Senator Kerry is not going to be talking about it. It’s not on his web page. This is a huge victory for President Bush.

AMY GOODMAN: Russell Mokhiber, "Corporate Crime Reporter", and producer at Pacifica station WPFW in Washington and Robert Bryce, his latest book is called, "cronies speaking to us from Texas. We like to thank you both for speaking with us.

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