Monday, February 27, 2006

THE "LAY-AWAY" PLAN? A freaked-out friend asks, "Can you read this and tell me whether you think that this guy [Ken Lay--Ed.] is 'no longer a millionaire' or if he still has millions to burn?"

Well, I'm no financial whiz but I never believe claims that the rich and famous suddenly become poor after becoming infamous...and legally embattled. Got that? Let me put it another way.

Weren't there reports about Bill Clinton going bankrupt during his crisis-ridden second term? I wasn't worried about well-connected Bill, who in fact seems flush today. I trusted that he had crafty financial and legal people on his side and also a very strong post-Presidency value--after being President, he could earn tons by speaking, consulting, writing (or "writing") books, etc.

And now there's this headline in The New York Times:
For Ken Lay, Enron's Riches Turning to Ruin
According to that story, Lay's worth, after millions of assets are weighed against millions of liabilities, is a mere $650,000.

As far as I'm concerned, that's not bad! Yet I'm skeptical as to whether that's even the whole picture. One reason: Mother Jones has reported that, starting next year, Ken and Linda Lay will start receiving a yearly income of about $900,000 from $4 million in annuities they purchased in 2000. Not only that, but the money is legally protected from creditors and legal judgments, unless fraudulent intent can be proven in court. That's according to an article entitled
Ken Lay's Nest Egg
I don't know if Times reporters Alexei Barrionuevo and Kurt Eichenwald considered the Mother Jones report. But something tells me that Ken Lay, who the Times reports may pay up to $30 million on legal defense, is on pretty solid ground financially. Poor people don't have that kind of legal network, do they? Certainly Lay is better off than the many people his company ripped off one way or another. Also, the Times article doesn't keep me from wondering about other ways the Lays might be able to tap into cash--perhaps through trusts (the Times article says that Ken Lay "was prominent in Houston's high-level business and social circles, setting up a charitable foundation that made him one of Houston's biggest philanthropists")--and other arrangements used to "protect" assets and secure future revenues. For instance, perhaps some holdings are in the name of Lay family members, who in 2002 were reportedly coached by a Hill & Knowlton PR exec before pleading poverty on national television.

So I wouldn't take reports of Ken Lay's poverty at face value. $650,000 on paper isn't bad...and really, how often do you hear cries of poverty from alleged corporate (and political) pilferers post-trial...whether or not they're convicted?

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