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Lay's Optimism at the Heart of his Downfall

STEVE INSKEEP, host:

The business news starts with the death of a one-time business giant.

(Soundbite of music)

INSKEEP: Kenneth Lay, the founder and former chairman of Enron has died. A family spokesman said Lay died early this morning in Aspen, Colorado, where he frequently vacationed. He reportedly suffered a massive heart attack. Lay had just been convicted on May - along with former Enron CEO Jeffrey Skilling - of defrauding investors and employees by lying about Enron's financial state in the months before the company collapsed in 2001. After the guilty verdict, Ken Lay spoke to reporters.

Mr. KENNETH LAY (Founder and Former Chairman, Enron): I firmly believe I'm innocent of the charges against me. But despite what happened today, I am still a very blessed man.

INSKEEP: One person who followed Ken Lay's career is Bethany McClean. She is a reporter for Fortune magazine and co-author of The Smartest Guys in the Room: the Amazing Rise and Scandalous Fall of Enron. Welcome to the program.

Ms. BETHANY MCCLEAN (Reporter, Fortune Magazine; Author): Thanks for having me.

INSKEEP: I feel like in that clip we just heard - the great strength, as well as the great weakness of Ken Lay - always putting a positive spin on events, even the worst ones.

Ms. MCCLEAN: That's a great way to look at it. I think Lay's lawyer thought to cast his optimism as the great strength of a businessman, a necessary quality to be a businessman. But it was exactly that optimism bordering on cheerleading that, in the end, brought him down because the jury convicted him on charges that he lied to employees and lied to investors about Enron's financial condition in its final months.

INSKEEP: You know, during the trial I paid a visit to Houston and was talking with a room full of people and asked how many people had met Ken Lay, and it seemed like most of people in the room raised their hands. This was a guy who, at his height, really got in the community and was a very positive presence, or tried to seem like one.

Ms. MCCLEAN: He absolutely did. He had a major impact in Houston - one of the things that was cited at the trial and that was well-known about Lay was the extent of the money that he and his wife Linda gave away to various philanthropic causes, when he had the money to give away. Ken Lay was widely regarded as a very gracious man, and he certainly - even through the stress of the trial - acted that way. That is, until he got on the stand, and a different side of Ken Lay emerged during his testimony. And that was when people began to feel that the odds of a conviction were inching ever higher.

INSKEEP: What was left of Ken Lay's fortune at the end of his life?

Ms. MCCLEAN: Very little was left. He had said during the trial that his net worth was now negative. I'm not sure that was strictly true. It turned out that he did indeed have millions in a Goldman Sachs account, but the prosecution was seeking that money, everything he had, and plus then some as forfeiture in the criminal case. So there would have been - he would have penniless. There would have been nothing left. I don't know what impact his death has on the prosecution's forfeiture, and whether that means - I'm sure that's not how his family is thinking - but whether that means there will be more money left, I don't know how that changes - this changes things.

INSKEEP: Bethany McClean of Fortune magazine. Thanks very much.

Ms. MCCLEAN: Thank you very much. Transcript provided by NPR, Copyright NPR.

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