I respectfully differ with my fellow New York Times-watchdog Andrew Sullivan, who says today “Good for the Times for correcting the record.” He’s giving them Good Journalism brownie points for a story reporting that former Enron CEO Kenneth Lay may well have had legitimate reasons for selling his Enron stock at the same time as he was exhorting Enron employees to buy it — contrary to earlier Times reports that made it seem as though Lay were engaging in a vicious combination of stock-touting and insider trading.
But read the Times story carefully. This is no correction at all. It’s actually a cover-up disguised as self-congratulation, combined with a blast at other newspapers who got the Lay story wrong. Judge for yourself. Kurt Eichenwald’s story Sunday reports that Lay was a true believer who sought to hang on to his collapsing Enron stock till the bitter end, and only sold his shares because he was forced to in order to meet loan payments — it’s not that he knew that Enron was on the verge of collapse. Eichenwald writes,
“That differs sharply from the story put forward early last year, after many news organizations, including The New York Times, reported that Mr. Lay had sold large numbers of shares as he urged others to buy. Many people seized on those facts as evidence of duplicity, not accounting for other possible explanations.”
That’s “correcting the record”? All Eichenwald is saying about the Times is that it “reported…those facts.” Yes, Lay sold shares. Yes, he urged others to buy. Objective facts. It’s the other guys — the “many people” –who “seized on those facts as evidence of duplicity, not accounting for other possible explanations.” You see, all the Times did is report all the news that’s fit to print… just “those facts,” ma’m.
And what makes it even less a “correcting the record” is the fact that the Times itself reported on these “other possible explanations” in it’s own very first story on Lay’s stock sales — yet still treated the stock sales as “evidence of duplicity.”
The Times first reported on Lay’s stock sales on January 18, 2002 in “Enron’s Chief Sold Shares After Receiving Warning Letter” by Richard A. Oppel Jr. and Jonathan D. Glater. The “evidence of duplicity” conclusion is reflected in the headline, and continues in the first two paragraphs:
“Documents disclosed yesterday indicate that Kenneth L. Lay, the chairman and chief executive of Enron, disposed of stock within days of receiving a letter warning of accounting problems at the company.
“That letter, from Sherron S. Watkins, a senior employee, ignited an investigation by Enron’s outside law firm, which concluded that the accounting issues could be embarrassing. As part of that inquiry, Mr. Lay met with Ms. Watkins.”
Later in the story, Lay’s stock sales are contrasted against his bullish public statements of support for the stock
“As Mr. Lay was apparently reducing his own stake in Enron, he was sounding optimistic in public. ‘As I mentioned at the employee meeting, one of my highest priorities is to restore investor confidence in Enron,’ Mr. Lay wrote in an e-mail message to employees dated Aug. 21. ‘This should result in a significantly higher stock price.'”
The possibility that the stock sales were connected with the repayment of loans is mentioned extensively in the story, but is offered only as an explanation for why the sales had not been publicly reported — not as a factor mitigating the “evidence of duplicity.”
“Mr. Lay did not report selling the stock, but a lawyer for Enron disclosed earlier this week that some shares had been used to repay a previously undisclosed loan from Enron. Enron has declined to discuss details of the repayment, but it seems likely that the shares purchased then were used to repay the loan…
“Under rules of the Securities and Exchange Commission, corporate officials are required to disclose sales of their company’s stock by the tenth day of the month after the sale. But there is an exception when the shares are surrendered to the company to repay a loan.”
The next day, January 19, 2002, Oppel wrote another story, this one headlined “Despite Warning, Enron Chief Urged Buying Of Shares.” The story begins,
“More than a month after an Enron vice president warned that the company might be an ‘elaborate accounting hoax,’ Kenneth L. Lay, the chairman, used an online chat to urge employees to buy Enron shares, a transcript of the session shows.
“Mr. Lay, who apparently disposed of some Enron stock himself within days of receiving the warning, assured employees in the chat session that the company’s leaders ‘were convinced both by all of our internal officers as well as our external auditor and counsel’ that its finances were legal and appropriate.”
This story mentions not a word about the possibility that Lay had sold stock to pay back loans. Instead, it takes a thematic detour to devote hundreds of words to the connections between Enron and the Bush administration — and then it’s back to the “evidence of duplicity”:
“Documents released this week by the House committee laid out a timeline that indicates that within days of receiving Ms. Watkins’s warning about Enron’s finances, Mr. Lay was disposing of some Enron shares.
“But in the chat session, Mr. Lay argued that the stock was a good buy, and he suggested that employees ‘talk up the stock and talk positively about Enron to your family and friends.’
“He also told employees that the third-quarter financial results were ‘looking great.’ Three weeks later, Enron disclosed that it lost $618 million in the quarter and that it was writing down $1.2 billion of its net worth partly to reflect the reversing of some of its complex deals.”
Two days later, on January 21, 2001, Oppel is back with another story headlined “Enron Chief Says His Sale Of Stock Was To Pay Loans.” It begins,
“Kenneth L. Lay, the chairman and chief executive of the Enron Corporation, repeatedly used millions of dollars in Enron stock to repay loans made to him by the company last year as Enron shares declined in value, his lawyer said today.
“The lawyer, Earl J. Silbert, said in a telephone interview that Mr. Lay had put up shares of his Enron stock as collateral for other investments, which he said he could not identify. As the value of Enron stock plummeted last year, he said, Mr. Lay anticipated that lenders would demand additional collateral.
“So Mr. Lay’s decision to dispose of Enron shares late in the year reflected a need to raise cash, not a concern about the health of Enron, and was not tied to a warning about the company’s finances made by an Enron vice president, Mr. Silbert said today. He added that the majority of the transactions related to the credit had occurred before August. Three months later, Enron restated earnings and began its spiral into bankruptcy.”
So if there was any kind of “correcting the record,” it was this story — filed over a year ago, only three days after the first story about “evidence of duplicity.” The closest Oppel comes to a formal correction, however, is this lame paragraph near the end of the story:
“The recent disclosure that Mr. Lay returned some stock to the company to repay a loan has fueled concern that he was exiting his position as he was encouraging others to buy.”
Natch, no mention that the “concern” that had been “fueled” was that of the New York Times.
So Sunday’s “correcting the record” is nothing of the sort. It’s revisionist history at best, a cover-up at worst — posing as though the Times stuck to objective facts all along while others drew unwarranted conclusions about non-existent crimes. And it’s not even news: it’s not based on new information at all — just stuff that the Times itself reported a year ago.
So why now? Who knows what makes the Times write what they write when they write it? Maybe it’s because Ken Lay’s personal fortune has now been so utterly decimated that he has become sufficiently non-plutocratic for the Times to find him worthy of sympathy. Eichenwald wrote Sunday,
“In one year, Mr. Lay has been transformed from a centimillionaire with huge stock holdings to a multimillionaire whose wealth is mostly tied up in hard-to-sell assets.”
As the Times would say, “Remember the Neediest!”
