He was Bush's good friend, now the Enron chief faces jail in $100bn trial

But despite his links to power, Kenneth Lay’s troubled past caught up with him yesterday as the disgraced former Enron chief executive was finally called to account for his role one of the biggest corporate scandals in history.

Three years after the collapse of the energy giant, which cost more than 20,000 jobs worldwide and left tens of billions of dollars in debt, Lay was led in handcuffs to a Houston courtroom, where he pleaded not guilty to 11 charges of bank and securities fraud and false accounting.

If convicted, he faces up to 175 years in jail and fines of $5.75 million (3.10 million). Bail was set at 270,000.

At a press conference after the hearing, Lay maintained his innocence and called for a trial as early as September. "The collapse of Enron was an enormous tragedy, and as CEO I accept responsibility for it. But that does not equate to a crime," he said.

"It does not mean that I knew everything that happened at Enron. I firmly reject any notion that I engaged in any wrongful or criminal activity. Not only are we ready to go to trial, but we are anxious to prove my innocence."

Investigators, however, are certain the scandal stretched right to the top. Thirty Enron employees, including its former president and chief financial officer, are already facing similar charges, but Lay, 62, the company’s founder, was always considered the big prize.

He surrendered himself to the FBI in Houston yesterday morning after being dropped off by his wife, Linda, in the family car, a far cry from the jet-set lifestyle and chauffeured limousines he used to enjoy.

Since Enron’s bankruptcy, his personal fortune has dropped from an estimated $400 million to less than $1 million and he will find a jail cell a world away from the luxury of the ten or so houses he used to own.

The family’s $30 million portfolio of property included three mansions in Aspen, Colorado, and a number of large houses and condominiums in and around Houston.

Lay retained one property, a floor of a block of flats in central Houston, worth an estimated $8 million.

In many ways, his personal rise and fall mirrors that of the company he created. Enron grew from the 1985 merger of two nondescript gas pipeline providers into the world’s largest energy company, making billions of dollars in energy futures, in effect profiting from gambles on fluctuating power prices.

Lay, too, rose from humble beginnings. Born in Texas, he studied economics at universities in Missouri and Houston and began his career as an economist at Exxon, before moving into energy management and rising slowly to the boardroom at the Houston Natural Gas company in 1984.

As Enron grew in size, Lay grew in power and influence. He made regular donations to both the Republican and Democratic parties and was a personal friend of the Bush family, especially the president’s father. Millions of dollars of Enron money was channelled to the younger Bush’s 2000 election campaign.

In 1990, Lay entertained the then prime minister, Margaret Thatcher, at an energy conference in Texas.

The company’s success was an illusion. While publicly announcing revenues topping 100 billion, Enron was actually mired in debt, losing money hand over fist on ill-advised and ambitious investments and disguising losses in a complex web of financial trickery and false accounting. Its deception of investors, customers and US financial regulators was uncovered when a vice-president of the company turned whistle-blower in 2001.

Lay has always insisted he did nothing wrong, blaming "bad apples" within the company for wrongdoings he knew nothing of and had no part in.

Signs emerged yesterday that the indictment was beginning to embarrass Mr Bush. His friend is likely to face trial just ahead of November’s presidential election, and the government has already stated that it wants the courts to crack down hard on corporate criminals.

As Lay made his first court appearance yesterday, Scott McClellan, the president’s press secretary, suggested Lay and Mr Bush had never been close friends and that "it’s been quite some time" since they talked. Lay is "a past supporter", he added.