|Enron Corp. founder Kenneth Lay returns to the federal courthouse following a lunch break in Houston, Monday, May 22, 2006. While jurors deliberate the outcome of the fraud and conspiracy trial of Lay and former Chief Executive Jeffrey Skilling, Lay is on trial again without a jury on charges stemming from his personal banking. (AP Photo/Ric Feld)|
Lay alma mater rebuffs endowment request
COLUMBIA, Mo. --Seven years after donating $1.1 million in
The school rejected the request, according to records obtained Monday by The Associated Press. By February, a Lay attorney was asking the school to return the money so Lay could pay legal bills stemming from the fraud and conspiracy case against him. The school again turned him down.
"Though the university recognizes the importance of hurricane relief, it also believes that the chair established in your name will promote the university's mission of providing outstanding education, research and service," Chancellor Brady Deaton replied to Lay on Oct. 28, 2005, nearly two months after Lay's initial request.
As Lay awaits a jury verdict in a fraud and conspiracy trial over the Enron collapse and remained on trial Monday in a second case related to his personal banking, the Kenneth L. Lay Chair in Economics at Missouri remains vacant.
A group of economics professors are actively searching for a worthy occupant, the university documents show. Search committee members attribute the delay not to concern by applicants over Lay's subsequent legal troubles but to an exhaustive search for the best candidates.
When 28 Missouri professors urged Deaton and other campus officials to reject the Lay donation soon after Enron filed for bankruptcy in December 2001, Deaton suggested the money should be returned if Lay was found guilty "of serious issues."
"Deaton had recommended that, but it was not something that anybody had decided," said Joe Moore, a spokesman for the four-campus University of Missouri system.
The final decision won't be made until after the trials conclude. And despite Deaton's suggestion, the Board of Curators -- which has never taken up the matter publicly -- has the ultimate say.
The reasons for Lay's sudden charitable streak -- as well as his more recent change of heart -- are difficult to determine. A spokeswoman in Texas said Lay was not immediately available for comment.
According to a statement issued Monday in response to inquiries by the AP, university lawyers met on Feb. 3 with an unnamed trustee in charge of Lay's assets. With the chair unfilled, the trustee came to Columbia expecting to return to Houston with the unspent endowment money to help cover Lay's legal fees.
"There was no mention by the trustee of sending any of the Lay donation to charities for hurricane relief," according to a written statement from the university Monday.
"We consider this to be university property," added Scott Charton, a University of Missouri system spokesman.
Lay donated a total of 16,500 shares of Enron stock in two installments, according to university records. The first batch of 10,000 shares were valued at $57.56 each in November 1998, with the remaining 6,500 shares worth approximately $80.46 each when donated in July 1999.
The university quickly cashed in those shares, avoiding the huge losses that plagued other Enron stockholders once the company collapsed.
News of the Katrina request by Lay came as a surprise to Clarence Y.H. Lo, a Missouri sociology professor among faculty members who signed an open letter to campus leaders in 2002 calling for a return of the Enron-fueled contribution.
As debate fomented on campus, much of the university's rationale for not returning the gift stemmed from a desire to honor the wishes of an influential donor, Lo said.
"We've always been under the assumption that Lay was totally wedded to the idea," said Lo.
If the money is ultimately returned to Lay, the professorship that would have been funded by Lay's money will remain intact, according to several Missouri economics professors, with replacement money coming from an undetermined source elsewhere at the university.
In his request, Lay listed 14 charities in the Houston and Galveston areas, including the American Red Cross of Greater Houston, United Way of the Texas Gulf Coast and five area churches.
"The human suffering is extraordinary and these funds are needed now to provide significant and critical disaster relief," Lay wrote to Deaton on Sept. 2, 2005.
Deaton responded on Oct. 28 that the university "does not deem it appropriate to relinquish the monies."
That decision had support from the state attorney general's office and the university's Board of Curators, records show.
Lay was born in 1942 in the southern Missouri town of Tyrone. When he was 16, the family moved to Columbia, where Lay's father was pastor of a Baptist church.
He graduated from Missouri in 1964 with a bachelor's degree in economics, earning a master's degree in economics the following year. He was named Enron's chairman and chief executive officer in 1986.