Welcome to The Hotel Kenneth Laya

One of the prosecution's witnesses in the Andersen trial, Andersen partner James Hecker, testified that he wrote the lyrics to a humorous song, making light of the firm's relationship with Enron. Mr. Hecker worked in Andersen's Houston office but was not a member of the firm's Enron audit team.

The song title, Hotel Kenneth Laya, refers to Enron's former CEO, Kenneth Lay. Set to the tune of the Eagles' Hotel California, the lyrics make reference to the long hours worked by members of the Andersen's Enron team at Enron's headquarters on Smith Street in Houston, the opportunity to bill many hours to the engagement any time of the year, and the energy giant's creative accounting methods. The lyrics make specific reference to Enron's Special Purpose Entities (SPEs) which are the off-books partnerships that resulted in the restatement of earnings last year that ultimately led to Enron's bankruptcy. The phrase "Black and Scholes-twisted" refers to the extremely complex method of stock option valuation developed by Fischer Black and Myron Scholes.

Perhaps most interesting about the lyrics is that they were written, not in 2000 or 2001 as one might expect, but in 1995. The Department of Justice introduced these lyrics as evidence that Andersen management has been aware of the potential legal exposure for their work on the Enron audit for at least six years before the problems became public.

Hotel Kenneth Laya

On a sidewalk on Smith Street, current text in my hand
Warm smell of kolaches, aren't Saturdays grand?
Up ahead on my schedule, nothing else was in sight
My head grew heavy and my hair grew thin
I knew I'd be working through the night.

Managers in the doorway, thinking outside of the box
And I was thinking to myself, I'll bust my butt and then I'll bust rocks
Then they burned up my schedule and they threw it away.
Then I found out what I thought before:
Smith Street was a one-way.

Welcome to the Hotel Can't Afford Ya
Such a gravy train
C-A-S or main
Plenty of work at the Hotel Can't Record Ya
Anytime of year, you can charge it here.

Her mind was Black and Scholes-twisted, though her margins are thin
She's got a lot of pretty, pretty spread that she takes in.
How we work in the bullpen, no budget sweat
Big hours on the summary, but nothing much net.

So I called up the partner, I said, "Please book this entry."
He said, "We haven't had a debit here since 1993."
And still the gurus are calling from far away
Worry wart in the middle of the night, just to hear them say,

Welcome to the Hotel Mark to Market
Such a lovely place, such a fragile place.
They're livin' it up at the Hotel Cram it Down Ya,
When the suits arrive, bring your alibis.

Mirrors on the 10K, make it look real nice
And she said, "We only make disclosures here of our own device."
And in the partners' chambers, cooking up a new deal
Three percent in a S-P-E
But they just can't make it real.

Last thing I remember, I was running for the door
I had to find the entries back to the GAAP we had before.
Relax said the client, we are programmed to succeed.
You can audit any time you like, but we will never bleed.

In his testimony, Mr. Hecker said the lyrics were intended as a joke.

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