Saturday, May 27, 2006

How to Give Christianity a Bad Name

I have a warm and loving and Christian family….
—Ken Lay

When you hear those words from a guy standing before a bank of microphones and news cameras, with his attorney beside him and his faithful second wife in the background, you know whoever he is and whatever he just got convicted of, he's going to be slinging it pretty good.

And Ken Lay did not disappoint.

In fact, moments before telling the world of his Christian family, which is, presumably, better than a Catholic family or a Muslim family, this same man and his Christian family and Christian friends had gathered in the courtroom in prayer with a Christian minister who compared the just-convicted ex-CEO's plight to that of Jesus Christ.

I'm not making that up. The only thing missing from the whole tableau was Tammy Faye Baker dabbing those big raccoon-shadowed eyes of hers for the cameras and declaring her eternal affinity for the good Christian Ken.

I do not mean disrespect to the Christian faith itself, nor do I suggest anyone dismiss Lay's faith-based self-justification out of hand. It provides, I think, as great an insight into his psyche as any phone call recording or board meeting transcript that might have been used as evidence in the trial itself.

Most of all we believe that God in fact is in control, and indeed He does work all things for good for those who love the Lord.

Now, keep in mind, the man saying this is the man who built Enron out of a small Houston pipeline company and who was still in charge when one of the largest corporate frauds in world business history began, was executed and ended in the destruction of the corporation it was meant to perpetuate.

Strictly speaking, of course, if God “in fact is in control” and the Lord does work “all things for good,” then:

1. No human being was responsible for the off-balance sheet partnerships that brought down Enron, since God was in control;

2. No human being needs to answer to former Enron shareholders whose hard-earned savings evaporated along with that company’s earnings, assets and stock price, since the Lord works all things for good and therefore He presumably encouraged those former Enron shareholders to get in on the Google IPO to recoup their Enron losses.

Of course, God was never “in control” at Enron: human beings were in control.

That the chief human being in control didn’t take responsibility Thursday afternoon is no surprise to this observer. I recall very clearly the October 23, 2001 emergency conference call which he and Andy Fastow (!) hosted, following poor third quarter earnings and a surprise $1.2 billion write-off that had spooked Wall Street’s Finest.

On that call, Lay gave few hard answers to the increasingly desperate questions about what exactly the company was writing off, and expressed nothing but optimism and a weird complacency about the company—possibly because he had been selling stock all along, unlike the poor slobs asking the questions and the clients of those poor slobs, who were watching their retirement funds evaporate with every new disclosure.

In fact, the only disappointment Lay appeared to express on that call was in the company’s stock price—possibly because, as it turned out, the entire operation hinged on shares of Enron that had, unbeknownst to the public, been pledged as collateral for off-balance assets used to prop up earnings and cash flow.

But don’t take my memory for it.

The following is an abbreviated recap of Ken Lay’s opening remarks on that call, provided in summary form by the indispensable Although the original quotes are gone, readers will get the sense of Lay’s deep denial and shoot-the-messenger self-rationalization that pre-dated this week's comments to the press:

--Company is extremely disappointed with its stock price.

--LJM is no longer is a related party. Terminated the financial arrangement with LJM.

--Welcomes the request of the SEC for information related to certain party transactions. Co-operating fully with the SEC. [Author's note: Patrick Byrne is apparently not, in fact, the first CEO in history to welcome an SEC inquiry]

--Structured finance vehicle in which LJM was investor was established to mitigate volatility associated with certain Enron merchant investments.

--Company recorded a $1.2 billion reduction in shareholders equity and a corresponding reduction in notes receivables.



Five years later, after the guilty verdict and the prayer circle in the court room, Ken Lay would tell the world that God is in control and things would work out for him because, as quoted above, "God works all things for the good for those who love the Lord," which was followed by the clincher:

"And we love our Lord."

Personally, I believe that whatever brand you choose, religion has more to do with, to paraphrase Spike Lee, “doing the right thing”—of which the Enron jurors apparently had a hard time finding examples among the former management team—and less to do with justifying one's self before the public by claiming a special relationship with Jesus Christ.

But the damage is done: yet another former high-flying hotshot gives Christianity a bad name.


Jeff Matthews
I Am Not Making This Up

© 2006 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.


Howard Lindzon said...

Classic - the guy is scum, but what about the christian and catholic and jewish bankers that turned their eyes to this stuff as they funded the scams that Enron perpetrated.

Enron is small compared to what the bankers are putting together in China for shareholders to be left holding bigger bags of nothing.

bubbles said...

That is exactly what upsets me so much. None of these guys every take responsibility for their actions when things turn bad they get religion and blame it on god. I wonder how many times Lay and others like him gave credit to god when things were going so well? Maybe someone can help me on this and provide evidence of one of these executives saying it was all gods work and they were just along for the ride when their stock was soaring. For once I’d like to hear someone confess and say “Yeah I did it, I take full responsibility, it’s my fault, I screwed up and I’m to blame.”

jbfokc said...

Did God tell Ken Lay to borrow the last $1 mm on his Enron line of credit two days before Enron filed for bankruptcy so he could pay off the mortgae on his Houston residence? (You can mot make this up. source: new York Times) God must know that Texas shields a debt free home from creditors. Why wouldn't an ethical , Christian CEO want to protect himself from his undeserving creditors when another $1 mm meant little to his comapny facing a cash crunch?

MattKelly54 said...

I agree with 99% of this post. Yet I am reluctant to share in your sorrow for the poor employee who lost his/her savings. Why do equity investors expect riskless returns. I am sure they were toasting Ken Lay when Enron was a top 10 company. Then when their risky stock tanks, they need the pity of the entire world including this blog. These greedy bastards needed a reality check. Maybe they should have invested their 401Ks in the market or god forbid a CD instead of the equity of an individual company. Please, don't blame Ken Lay for poor asset allocation. Maybe Jesus was teaching them a lesson and he did do it for a reason. If your going to invest 100% of your worth in bullshit operations, then you will lose 100% of your money. This is the gospel according to Ken.

Why does everyone in the world consider stocks risky except the people who invested in Enron?

RobRice61 said...

The corporate fat cat thiefs seem to always find religion after they have ripped off the public. Former WorldCom CEO Bernie Ebbers did the same. Perhaps they need to be thrown to the lions.

DaleW said...

I would think anyone facing violent penetentiary buggery for the rest of their lives would in fact become penetent quickly and find Christ or whatever other deity that is available.

econjohn said...

to MattKelly54:
Har. I love it. Enron's employees were "greedy bastards"! Man. How'd you get spun around on that one?

Maybe they should have invested their 401Ks in the market or god forbid a CD instead of the equity of an individual company.

They would agree likely with you. Alas, much of their ability to do so was just a mite bit curtailed. Yes, that change in plan administrators did come at an inopportune time, didn't it? Locking up *all* employees holdings just coincidentally as the poop really hit the blades. Meanwhile, their bosses were selling their shares held in retirement accounts (huh! what d'ya know...different plan!). So secretaries had to go through the torture of helplessly watching their future melt away.

Then there was this:
The design of Enron's 401K savings plan [...] contributed substantially to employee losses. Enron limited employees' investment freedom from the start by matching their contributions only with company stock and by preventing employees from selling that stock until age 50. (emphasis added)

(source: Slate -- 401 reasons to love Enron

I'm sure you would have quit on day 1, when HR put those terms of the plan in front of you. But these people were just greedy bastards looking for risk-free money...

zootso said...

Excellent observations. Ken Lay needs's too bad that only NOW and not BEFORE is his faith affecting him-

AltaJoe said...

Why does it surprise anyone? "God" has been the ultimate excuse for evil since the dawn of man.

ArbOfValue said...


When your beloved CEO is telling you that all is well, in fact so well that he is buying even more stock (though in reality he's dumping rapidly), do you really blame "greedy" employees for holding on to their shares?

Most employees don't understand investing, or the stock market. When you have a charismatic leader who seemingly walks on water (due to massive PR and supposedly great results for years on end), they tend to put their faith in the guy.

dearieme said...

I'm just an ignorant foreigner, but how on earth do you find yourselves with laws that allow "Enron limited employees' investment freedom from the start by matching their contributions only with company stock and by preventing employees from selling that stock until age 50"?

JFB said...

Of course he is Christian. The bible teaches greed is a sin, he sinned, thus he got convicted.
The others that got caught-up and burned by the destruction of greed, sinned from following a false idol....Enron.

Pretty cut-and-dry.


jimmy2times said...

Amen, Brother Mathews! That strategy paid off for Scrushy. Makes me ill when I think about it. I wish you could've seen Scrushy's morning show in Alabama...WOW!

whippoorwill said...

You folks have way over analyzed this. For someone who was just told that he will die in jail, it is natural to seek comfort wherever it is available.

buck said...

Give this guy a break. He was just told that he will die in jail.

dayzofelijah said...

Ken Lay's response to his conviction breaks my heart. May the Lord he says he loves have mercy on him: "unto whomsoever much is given, of him shall much be required".