Ken Lay as Political Capitalist

13 July 2009 at 5:10 pm Peter G. Klein Leave a comment

| Peter Klein |

This blog has taken a special interest in Ken Lay, not just because of his local connections but also because he typifies the modern CEO of a regulated industry, more lobbyist and PR man than manager. Lay, a long-time energy regulator before becoming Enron CEO, was skilled in the ways of Washington — making his reputation as poster-boy for “unbridled capitalism” all the more ironic.

Here is Rob Bradley, quoting from his book Political Capitalism, on Lay and Enron:

Who was Ken Lay, the architect and chairman of Enron from its formation in the mid-1980s until its bankruptcy? The once-celebrated visionary of the energy industry was not an engineer, as were most leaders in the energy sector. Lay did not possess an accounting or finance background, as did some senior executives. He never clawed his way up the corporate ladder in various operational divisions, much less built a company from scratch. No, Enron’s leader was a Ph.D. economist, interested in the big picture and the ways of political power. His résumé was top-heavy with Washington experience, acquired at three federal jobs, the last two regulating the energy industry. . . .

Government favor propelled Enron’s profit-centers in domestic power plants, natural gas and electricity marketing, wind and solar power, infrastructure in underdeveloped countries, and unconventional natural gas production. Enron was all about complex federal laws and administrative regulations, such as special provisions within the Natural Gas Policy Act of 1978, Public Utility Regulatory Policies Act of 1978, Omnibus Budget Reconciliation Act of 1990, and Energy Policy Act of 1992 — or FERC rulings such as Regulation of Natural Gas Pipelines after Partial Wellhead Decontrol (FERC Order No. 436: 1985), Pipeline Service Obligations and Revisions to Regulations Governing Self-Implementing Transportation Under Part 284 of the Commission’s Regulations (FERC Order No. 636: 1992), and Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities (FERC Order 888: 1996). The arcane was pure gold to Enron.