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'Deeply Troubled', Lay Takes Fifth - 2002-02-13

Former Enron Chairman Kenneth Lay invoked his Constitutionally-protected right to remain silent before a Senate panel investigating the collapse of the company.

Mr. Lay invoked his Fifth Amendment right to avoid self-incrimination when he appeared under subpoena before the Senate Commerce Committee Tuesday. But he made clear he was reluctantly doing so, on his lawyer's advice. "I am deeply troubled about asserting these rights because it may be perceived by some that I have something to hide. But after agonizing consideration, I cannot disregard my counsel's instruction," said Mr. Lay.

Senators reacted angrily to Mr. Lay's decision saying they had hoped he would offer an explanation to the many investors who lost their life savings when Enron went bankrupt last month.

Senator Peter Fitzgerald is an Illinois Republican. "I would say you are a carnival barker, except that would not be fair to carnival barkers," said Illinois Republican Peter Fitzgerald. "A carny will at least tell you up front that he is running a shell game."

An Enron board member who led an internal review of the company's downfall, William Powers, testified that Mr. Lay approved partnerships set up by senior executives. The partnerships ultimately led to the company's collapse.

Mr. Powers, who is dean of the University of Texas Law School, said Mr. Lay is to blame for Enron's failure to implement controls that would have prevented the financial abuses.

Under questioning by Democratic Senator Daniel Inouye of Hawaii, Mr. Powers said the former Enron chairman backed the questionable partnerships because the company's auditor, Arthur Andersen, did so. "He said that he thought these transactions were okay because Andersen had signed off on them," said Mr. Powers.

Mr. Lay, who refused to testify voluntarily last week, appeared before the Senate panel under subpoena. He indicated he will also invoke his right to remain silent when he appears before a House panel on Thursday.

Mr. Lay is the sixth executive to remain silent before Congress in the Enron investigation. Four current and former officials did so last week, and the company's fired auditor declined to testify last month.

Enron's collapse -- the largest bankruptcy in U.S. history -- is also being probed by criminal and regulatory investigators.