HOUSTON — Kenneth L. Lay, who presided over Enron Corp. as it turned into one of the biggest financial scandals of the era, was indicted Wednesday by a federal grand jury here.
Enron's former chairman and chief executive said he would surrender to authorities this morning, capping an investigation into the downfall of the energy giant that began more than two years ago.
The criminal charges against Lay are contained in a sealed indictment and will be made public today when he appears before a magistrate to enter a plea. Civil charges are also expected to be filed today by the Securities and Exchange Commission.
"I have done nothing wrong, and the indictment is not justified," Lay, 62, said in a statement.
Enron's downfall in late 2001 deprived thousands of employees of their jobs and pensions, destroyed tens of billions of dollars in market value and pulled back the curtain on a dizzyingly complex fraud scheme.
Top executives created phantom partnerships that did secret transactions with the company, enriching themselves while bleeding Enron. Other executives exploited the California energy crisis. Recently released tape recordings captured Enron traders gleefully talking about creating false congestion on electricity transmission lines and circumventing price caps.
Enron's collapse was the first in a wave of corporate scandals that grew to encompass telecommunications provider WorldCom Inc., cable giant Adelphia Communications Corp. and lifestyle entrepreneur Martha Stewart. But it remains the most wide-ranging and influential.
The Enron affair sank the company's venerable accounting firm, Arthur Andersen, which was convicted of obstruction for shredding documents. The accountants enabled Enron to hide debt and vastly overstate its earnings through the hidden partnerships.
The Enron meltdown led to a wave of corporate reform and helped put an end to hero worship of executives. Once hailed as a brilliant symbol of innovation, Enron is now regarded as a model of how a corporation can consume itself if left unchecked.
From the start, the case has had political overtones. Lay was close to former President George H.W. Bush and his son, President Bush, who dubbed the executive "Kenny Boy."
Lay lent Enron's corporate jet to the younger Bush eight times during the 2000 campaign, was co-chair of a gala tribute to him and was one of his top campaign contributors. Enron was also a major patron of Bush and the Republican Party.
