Dumbness ain’t a defense anymore

Bernie Ebbers tried the “I didn’t know it defense and failed, but that’s not stopping Ken Lay from trying it again. And he just got some support from a book called A Conspiracy of Fools by Kurt Eichenwald, that seems to support Lay’s contention that it all happened behind his back.

This would be ironic if it weren’t sad: The Economist says Lay is on a “charm offensive” telling anyone who’d listen that he is in fact pretty dumb, and that he was not paying much attention to his company. The Times’s review of Eichenwald’s book explains why that is hard to believe.

Kenneth Lay, the company’s longtime chief executive, who hired Mr. Skilling and mostly turned over the management reins, emerges in Mr. Eichenwald’s telling as a kind of amiable simpleton, glad-handing his way through Houston’s moneyed upper crust. But unlike, say, Bernard Ebbers, the recently convicted former bouncer and high school coach who ran WorldCom onto the rocks, Mr. Lay is a Ph.D. economist and a former deputy under secretary of the interior, who had transformed the natural gas industry. Does Mr. Eichenwald believe that he really had no clue? That he never noticed the mad scramble to manufacture profits at the end of each reporting period? That he never wondered about the plausibility of a tenfold jump in revenues in just five years?

In case you’ve forgotten what Lay presided over: (from the Times’s review again)

In early 2000 Fortune magazine selected Enron as America’s best-managed and most innovative company, and Enron’s stock market valuation peaked at $73 billion that August. The following March the company announced that 2000 revenues had more than doubled, to $100 billion. The company paid its normal quarterly dividend in October 2001, announcing that regular earnings were up 26 percent and that it was “on track” to meet its full-year profit targets.

Six weeks later, Enron filed for bankruptcy.