Posted on: Tuesday, September 30, 2003
SEC sues to obtain papers of former Enron chairman
By Carrie Johnson and Peter Behr
Washington Post
WASHINGTON — The Securities and Exchange Commission yesterday sued Enron Corp.'s former chairman and chief executive, Kenneth L. Lay, seeking to force Lay to turn over letters, speeches and memos that bear Lay's handwriting and that might help determine what he knew about suspect financial transactions at the center of the Enron investigation.
The unusual court action was taken after months of back and forth between the SEC and Lay's lawyers, who argue that handing over the papers could violate Lay's Fifth Amendment right against self-incrimination.
It also signals that investigators are continuing to probe Lay's awareness of Enron's weakening financial condition in the year before its December 2001 bankruptcy filing.
During that period, Lay used a corporate credit line to acquire and then sell $70 million in company shares, and investigators are looking into whether he made proper disclosure to investors.
Lay contends that the documents in question are beyond the reach of the SEC because they are personal and not corporate.
The Justice Department's Enron task force and a team of SEC lawyers have filed criminal and civil charges against nearly a dozen former executives of the company, but no charges have been filed against either Lay or former chief executive Jeffrey K. Skilling.
"We will continue to pursue the investigation wherever it leads," said Charles J. Clark, an SEC enforcement division assistant director.
Representatives of Lay declined to comment. Lay already has turned over more than 30,000 pages of documents, including appointment books, calendars, and bank records for himself and his wife, Linda.
In a Sept. 26 letter to the SEC included as part of the suit, Lay lawyer Bruce W. Collins wrote that he had "tried very hard" to reach agreement with the agency on the remaining documents, but that turning over the records could put Lay in jeopardy in the future if a judge ruled that Lay had waived his Fifth Amendment rights by providing the papers.
At issue in yesterday's lawsuit are two folders stuffed with other papers that include notes written by Lay in the margins. Many of them may reflect Lay's "thought processes," according to court papers.
