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Ken Lay’s legacy

Kai Ryssdal Jul 5, 2006

KAI RYSSDAL: You heard the news this morning, I’ll bet. Former Enron Chairman Ken Lay died at his home in Aspen, Colo., overnight. Lay was 64 years old. And in the obituaries that will be in tomorrow’s papers, right up near the top, will be a sentence that goes something like this: “Lay was convicted earlier this year of fraud and conspiracy related to the giant energy company’s collapse and bankruptcy.”

But some who knew Ken Lay long before Enron say they weren’t at all surprised at what happened to that company. I talked to longtime energy industry journalist Barbara Shook today at her office in Houston.

BARBARA SHOOK: Glad to be on the show today. Sorry that it’s not a more pleasant topic.

RYSSDAL: You knew Ken Lay back before he became Ken Lay the symbol of all gone bad in corporate America, didn’t you?

SHOOK: Right. I’d known Ken since about 1981-1982, when he became president of Transco Energy Co., which is another natural gas pipeline company based in Houston.

RYSSDAL: His public persona and his private dealings . . . I’d be interested in your perception of how you think he took risks with companies and with corporate money that perhaps, maybe, you and people who knew him for a long time, might have had an inkling about.

SHOOK: Oh, I had an inkling about Ken Lay’s ethics starting in 1984 when he came to Houston Natural Gas as the chairman and chief executive. Within three to six weeks, the people with integrity started leaving, either on their own or because they were forced out. And one of them told me he was just too old to learn how to do business another way. I had no doubt as to what he was trying to tell me, which was that Ken Lay would do business in ways that were not the common practice.

And I want to clarify something else. Ken Lay did not create Enron. A man named Sam Segner created Enron. Ken just managed, through his more skillful corporate infighting skills, to force Sam Segner out.

RYSSDAL: But Ken Lay rode very high on Enron’s credibility, as it were, for 16, 17 years.

SHOOK: Oh, yes he did. And I never trusted him the whole time. I just didn’t understand why others couldn’t see through. It was so obvious. The company had huge turnover. It went through a number of financial problems. But, you look back and the signs were there.

RYSSDAL: You know, Enron has this reputation that will live for a long, long time in corporate history. Is it separable at all from the legacy of Ken Lay? Or maybe the question should be the other way around?

SHOOK: No. They are one and the same. Ken Lay was Enron. Ken Lay knew what was going on. Ken Lay had time to send personal notes of clarification to journalists who were affiliated with arcane trade publications on obscure points of some contract proposal. He knew what was going on.

RYSSDAL: Barbara Shook is the Houston bureau chief for the Energy Intelligence Group. Barbara, thanks a lot for your time.

SHOOK: Glad to help.

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