Former Enron Chairman Lay takes Fifth, denounced by senators for refusing to testify

WASHINGTON — Kenneth Lay, the presidential pal who built Enron into a darling of Wall Street only to see it collapse in scandal, exercised his constitutional rights yesterday and refused to testify to Congress.

"I am deeply troubled about asserting these rights," Lay said. "It may be perceived by some that I have something to hide."

But he said his attorneys had advised him not to testify. "I cannot disregard my counsel's instruction," he said.

In a brief statement, Lay expressed a "profound sadness" about what had happened to Enron. Before being called to the witness table, Lay sat glumly as senator after senator criticized him for maintaining his silence.

"Obviously Mr. Lay, the anger here is palpable," said Sen. John Kerry, D-Mass.

William Powers, an Enron director and dean of the University of Texas Law School, who led an internal company investigation, later testified that documents shredded at Enron's Houston headquarters might have contained financial information that congressional investigators were seeking.

"There may be information on those documents that were shredded that would have helped," Powers told the senators.

He also said Lay approved partnership arrangements by senior executives, noting that in one instance, "Mr. Lay had signed off on a deal approval sheet" for a related transaction.

Lay "bears significant responsibility ... for Enron's failure to implement sufficiently rigorous procedural controls to prevent the abuses," Powers said.

Lawmakers said they had a wide array of questions for Lay, who resigned Jan. 23, about the Enron bankruptcy and its devastating impact on millions of American investors and thousands of company employees.