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KENNETH L. LAY 1942 - 2006

Business Star to Icon of Greed

The man who built a onetime energy giant will be remembered by many for his crimes. In Houston, some focus on his philanthropic side.

July 06, 2006|Martin Zimmerman | Times Staff Writer

The twilight years of Kenneth L. Lay's career were supposed to be a model of elder statesmanship.

Having built Enron Corp. into an energy trading colossus, Lay seemed poised at the turn of the millennium to leave the corporate hustle behind for the realm of public service -- a run for mayor of Houston, perhaps, or a Cabinet post in the administration of his good friend George W. Bush.

Then there was the world of philanthropy, where a man with Lay's record of involvement in causes such as the arts and minority education would be highly prized.

Instead, Lay's final days in the public eye were spent in a federal courtroom in downtown Houston, where he and fellow former Enron Chief Executive Jeffrey K. Skilling were on trial for lying to the public about their company's dire financial condition so that they could protect the value of their multimillion-dollar holdings of Enron stock.

When the trial concluded May 25 with a raft of guilty verdicts and the prospect of years in prison for both men, Lay could do little except pray with family members and gamely pronounce his innocence and intention to appeal.

Lay's death early Wednesday of a massive heart attack at age 64 came less than six weeks after those verdicts. In an almost anticlimactic way, his death provided a coda to a life that saw the son of a small-town Missouri preacher rise to the heights of American business, only to end up as a symbol of corporate chicanery and greed.

"His career was like a Greek tragedy," said Linnea Bernard McCord, associate professor of business law at the Graziadio School of Business and Management at Pepperdine University. "He started from nothing and became so successful. But as the Greeks taught long ago, hubris brings down the strongest."

At the height of his success in the late '90s, Lay was routinely described as a visionary who shook up the tightly regulated natural gas business and invented a whole new way to trade energy. Enron became one of the country's biggest and most admired companies, and Lay and other executives frequently landed on magazine covers -- stars of the brave new world of commodities trading.

But as details of the sordid side of Enron began to seep out in late 2001 and the company skidded toward what was then the biggest bankruptcy filing in U.S. history, Lay's prestige plummeted along with the company's stock price.

It was a stunning fall from grace for Lay, by all accounts a deeply religious man who, in the words of a former colleague, "believed in the rules set out by Christianity and thought Enron should lead the community in helping the unfortunate and disadvantaged."

Kenneth Lee Lay was born April 15, 1942, in the small Ozark town of Tyrone, Mo. (current population: 40), the only son of a Baptist minister. The family was poor but proud, according to published interviews with Lay's siblings, and took pains not to appear destitute.

With the help of scholarships and money earned from after-school jobs, Lay attended the University of Missouri in Columbia, receiving a bachelor's degree in 1964 and a master's degree a year later. He later would earn a doctorate in economics from the University of Houston.

After working for a predecessor of today's Exxon Mobil Corp. in Houston and doing a hitch in the Vietnam War-era Navy, Lay landed at the Federal Power Commission during the Nixon administration. Along the way, he garnered a reputation for impressing his superiors -- whether it was an admiral or a power commissioner.

At the commission, Lay learned the intricacies of natural gas regulation, knowledge put to good use when he returned to the private sector in 1974.

After a long stint in the executive ranks of Florida Gas, Lay took the top job at Houston Natural Gas in 1984. The next year, he merged that firm with another gas company to form Enron, creating the largest natural gas pipeline system in the nation.

As the industry deregulated, Lay pushed Enron into a variety of businesses, including energy trading, power generation and water services.

"He had the early ideas and pushed to get it done," said Michelle Michot Foss, chief energy economist and head of the Center for Energy Economics at the University of Texas in Austin.

By 2000, Enron ranked seventh on the Fortune 500 list of the nation's biggest companies and claimed $101 billion in annual revenue.

As Enron grew rich and powerful, so did Lay. In 2000, he and his second wife, Linda, listed $52 million in assets and owned multiple vacation homes in Aspen, Colo., and on the Gulf Coast in Texas.

Lay also collected political allies, including George H.W. Bush and his son George W. Bush.

The younger Bush repeatedly flew on Enron corporate jets during the 2000 presidential campaign, and Lay and his company donated thousands of dollars to Bush and the GOP -- although associates note that Lay was savvy enough to include some Democrats in his campaign largess.

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