US FEDERAL prosecutors are close to completing their investigation into the role of Kenneth Lay in the collapse of Enron, which could see the former chairman of the collapsed energy giant face charges of fraud within two weeks.
Charges against Mr Lay would be the biggest development since prosecutors began investigating the record-breaking bankruptcy, which occurred in December 2001.
Mr Lay has long denied any wrongdoing in the case, in which investigators have sought to pin blame for the Enron collapse on its top executives.
However, in recent days prosecutors in Houston have finished interviewing dozens of former employees of Enron in an attempt to back up a string of proposed charges against Mr Lay.
It is understood the prosecutors have focused their questions on the final five months leading up to the collapse of Enron.
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The witnesses have appeared before a grand jury in Houston and prosecutors are expected to ask the grand jury to indict Mr Lay with a series of fraud and insider-dealing charges by the end of the month.
The investigation into Mr Lay’s actions at Enron has been going on for the past two and a half years.
It is understood that testimony from Andrew Fastow, Enron’s former chief financial officer, has formed the central part of the proposed indictment against Mr Lay.
Other key witnesses are expected to include Steven Kean, Mr Lay’s former chief of staff, and Jim Derrick, the energy company’s former top lawyer.
Mike Ramsey, Mr Lay’s Houston lawyer, declined to comment when approached by The Times.
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So far 21 former Enron workers have been charged in connection with the energy group’s bankruptcy, along with eight individuals from accounting firms and banks that did business with the company.
Jeffrey Skilling, the former chief executive who resigned in August 2001, just before the company’s bankruptcy, has been charged with 35 counts of fraud, but denies all of them.
Richard Causey, the former Enron chief accountant has also been charged with 31 counts of fraud and has pleaded not guilty.
Insiders believe that Mr Lay could be added to an indictment that includes Mr Skilling and Mr Causey so that they can be tried together.
Mr Lay’s prospective indictment is likely to focus on three memos allegedly sent in the months before the bankruptcy by senior members of staff, which are said to have given warning of accounting fraud and other irregularities. One was allegedly sent by Sherron Watkins, the Enron “whistle-blower” credited with revealing the massive fraud.
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Mr Lay is also expected to be indicted on charges linked to insider-trading and supposedly “talking up” the Enron share price among employees just before the company failed.
The US Department of Justice task force leading the investigation into Mr Lay declined to comment.
MEMO CLAIM