Text of Letters Sent by Lay's Lawyer

WASHINGTON – Text of letters sent Sunday by a lawyer for former Enron chairman Kenneth Lay to the chairmen of the House Financial Services Committee and the Senate Committee on Commerce, Science and Transportation. The letters from Earl J. Silbert were identical except the one to the Senate chairman referred to Lay having accepted an invitation to appear before the full committee and a subcommittee, while the letter to the House chairman referred only to a hearing scheduled by the full committee.

Dear Mr. Chairman:

About one month ago, Kenneth Lay accepted your invitation to appear before this committee (and subcommittee) to testify about the collapse of Enron. He was looking forward to a meaningful, reasoned question and answer session to provide his understanding of the events and to discuss with you a number of related policy, legal, and regulatory issues. This tragedy for the company, its current and prior employees, retirees, and shareholders has been devastating and heartbreaking to him.

Many allegations have been publicized in the news media accusing Mr. Lay and others of wrongful, even criminal conduct. He has not personally responded to them. Some have construed his silence as acquiescence. They are wrong. Mr. Lay firmly rejects any allegations that he engaged in wrongful or criminal conduct. He did and still does believe that the most appropriate place to explore these allegations and related policy issues was before the Congress.

Mr. Lay, with counsel, has been spending extensive time preparing both for written and oral testimony. As of this morning, Mr. Lay intended to testify tomorrow. In the midst of our preparation, particularly disturbing statements have been made by members of Congress, even today, on the eve of Mr. Lay's scheduled appearance. These inflammatory statements show that judgments have been reached and the tenor of the hearing will be prosecutorial.

For example, on NBC's Today Show and MSNBC, Senator Peter Fitzgerald charged:

"Ken Lay obviously had to know that this was a giant pyramid scheme — a giant shell game. ... They grafted a pyramid onto an old fashioned utility. ... There was blatant fraudulent activity going on for years, and in my opinion he had to have known. ..."

On Meet the Press today, Senator Byron Dorgan concluded:

"(T)his is almost a culture of corporate corruption. ..."

"Clearly some things have happened here that are going to put some real people in real jeopardy and trouble."

On the same TV program, Congressman Billy Tauzin, the chair of one of the committees conducting one of the principal investigations of the Enron collapse, claimed:

"Secondly: were they really wrongdoing, and maybe somebody ought to go to the pokey for this? I think we are going to find out yes to that question."

Congressman Tauzin also charged:

"(N)ot only were there corrupt practices, not only was there a hiding of the fact that debt was being put off the balance sheets and profits were reported that didn't exist, but we've found more than that. I think we're finding what may clearly end up being securities fraud, attempts not to hedge or put debt out of the company, which many companies do, but literally fraudulent, phony attempts to do so. ..."

These are a few examples, from among many others. Indeed, as The New York Times reported today, in appearing before the subcommittee, "Mr. Lay will face a panel eager to pulverize him." As a consequence, I have instructed Mr. lay to withdraw his prior acceptance of your invitation. He does so, but only with the greatest reluctance and regret. He also wishes to express, as do I, our sincerest apologies for any inconvenience caused by this decision, but he cannot be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard.

Sincerely,

Earl J. Silbert