Enron feared witch hunt, Lay says

Enron executives thought the firm was the victim of a witch hunt when stories broke about its financial problems, company founder Kenneth Lay has said.

Speaking during his second day in the witness box, Mr Lay reiterated that he thought Enron’s finances were healthy.

Mr Lay has been accused of hiding the losses and lying to boost the company’s share price. Mr Lay claims that former finance chief Andrew Fastow was behind the fraud.

The problems at Enron were being probed by the Wall Street Journal, which asked the company to comment on partnerships that had been set up by Mr Fastow.

Mr Lay said that he was talked out of replying to the newspaper’s questions by Enron’s public relations team, even though it was against his better judgement.

“My policy had always been it’s better to talk to the press than not talk to the press,” Mr Lay told jurors. “At least try to get your viewpoint across and let them at least consider it.”

However, Enron felt that the newspaper was asking biased questions.

“We thought in fact the Wall Street Journal was on a witch hunt,” Mr Lay said on Tuesday in the Houston court room. “We didn’t have any information that Mr Fastow had done anything inappropriate.”

The partnerships had in fact been used to hide massive losses, and the subsequent investigation and scrutiny was a key factor in Enron’s collapse.

Mr Lay has been arguing that Enron’s problems were as much about a sudden credit crunch and loss of investor confidence as it was about fraud.