Kenneth Lay, Enron's former chief executive and chairman, on Monday took the stand in his fraud and conspiracy trial, blaming the company's bankruptcy on "a classic run on the bank."
He claimed this was sparked by the actions of Andrew Fastow, Enron's former chief financial officer.
Mr Fastow pleaded guilty to fraud in an agreement with prosecutors under which testified against Mr Lay and his co-defendant, Jeffrey Skilling, Enron's former chief executive.
He has been sentenced to 10 years in prison in connection with the 2001 bankruptcy. Mr Fastow admitted he hid his thievery at Enron from the defendants, but said they were guilty of the indirect crime of hiding the deteriorating state of Enron's finances from the public.
The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.Mr Lay angrily dismissed those charges as "absolutely ludicrous", telling jurors the "fundamentals of Enron were incredibly strong."
He admitted the company, then ranked the US's 7th biggest, clearly had problems, as all companies do, but said the company was "candid" about them and considered them manageable.
"I accept full responsibility for everything that happened at Enron," he said. "I cannot take full responsibility for the individual conduct of all 30,000 employees at Enron and particularly those who appear to have engaged in criminal activities."
Yet, he said, the emergence of Mr Fastow's crimes, combined with short-sellers targeting Enron and negative articles in the Wall Street Journal about Mr Fastow, were the logs underpinning the "firestorm" that took hold.
"It took some other things to set up the tinder box," he added. Those included investors made skittish by a slowing economy and the September 11 terrorist attacks; Mr Skilling's resignation after just six months in the top job; and Enron's decision to make write-offs in October 2001 to clean up its books.
"All of that fed into a firestorm that we couldn't stop," Mr Lay said.
He noted that Enron, despite its market capitalisation growing under his watch, from $2bn at its inception in 1985 to $60bn in 2001, was dependant upon public confidence in order to both do business and to support the stock price.
In retrospect, he said, Enron should have ensured it had a stronger credit rating to protect its business against such a crisis of confidence.
Enron had a BBB+ credit rating, he said, and it was moving toward an A rating "but we just didn't move fast enough" to slow down Enron's growth and commit more cash to reduce debt.
"In hindsight, yes, we should have made those tradeoffs," Mr Lay said. "That might have made the difference in the end, it may not."
