Corporate lawyer as shield

7 Apr 2006 By Dan Ackman

Ken Lay s attorneys called Enron s outside counsel to the stand to show he blessed the former chief s dealings. But this left the impression the investigation was little more than a whitewash, as probes sanctioned by management can easily be.

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Max Hendrick III, an attorney at Vinson & Elkins, then Enron's outside law firm, testified that his investigation in 2001 of Sherron Watkins' complaints about financial wrongdoing to Kenneth Lay led a to an investigation that was quick and narrow.

Watkins had sent Lay a memo warning him about a wave of accounting scandals including dubious relatedparty transactions and urged an objective review.

Hendrick defended the fourweek inquiry, which concluded that further investigation wasn't necessary. Lay's lawyers say the assignment shows the former Enron chief took Watkins's charges seriously. But his own memo stating the parameters and results of his firm's probe were seized on by prosecutors to show that Lay, even as he hired lawyers, turned a blind eye to the budding scandal at the nowbankrupt energy trader.

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