Enron's Ken Lay and Jeffrey Skilling go to
their long-awaited trial Monday in U.S. District Court in Houston. Both ex-CEOs face federal wire fraud, securities fraud, and insider trading charges. (Ken Lay's
frogmarch indictment in July 2004 was dailykossed
here.)
Whether or not they end up doing hard time (we can hope), the ethics-challenged energy-trading company execs not only knowingly misrepresented the company's massively hemorrhaging financial condition to investors & auditors, but also walked away with hundreds of millions of dollars at the expense of California taxpayers, ordinary investors, and some 4,000 employees' retirement savings.
But especially after viewing the recently released DVD, Enron: The Smartest Guys in the Room (based on the eponymous bestselling book), I'd like to hold up as heroes -- no, more as inspirational examples -- two particular smart, professional women who articulated the plain truth through the fog-machine-made fog of the powerful...
In the context of a lot of Wall Street hype, and a testosterone-laced internal culture of often ridiculous amounts of corporate swagger, two women simply cautioned out loud that the Emperor might actually be, shall we say, ah, clothing-impaired...These women were, of course:
Sherron Watkins, Enron financial professional who cautioned Ken Lay anonymously [PDF] about accounting schemes that struck her as problematic and risky, and who later testified before Congress [PDF] about these and co-wrote/was featured in the book Power Failure about it; and
Bethany McLean, Fortune.com writer and co-author of the book that inspired the documentary film, as well as author of the March 2001 Fortune article that first expressed skepticism about Enron's darling-of-Wall-Street status and wondered aloud what actually were the fundamentals of the company, how exactly did Enron make its money?
The film depicts the tale of Enron as a classical one of hubris on a massive scale. The players do not start off as inherently evil, they simply let blind ambition get them into deep ethical, financial, and ultimately legal, trouble. Rapid success and an extremely machismo culture at the company fuel a power-drunk cheating binge, and for those on the Enron trading floor, a grotesquely immoral market-gaming spree, as tapes of the traders later revealed. They all get away with stuff at first, and the adrenalin rush eggs them onto ever larger and more crooked conquests. Importantly, the complicit silence of Enron's accountants, lawyers, bankers, and various other professionals -- who go along with the fraud due to passive conformity or because they too got in on the action -- enables Enron's escalatingly fraudulent schemes.
By the end, Enron's massive ethical lapses include: 1) manufacturing from whole cloth and hugely profiting from rolling blackouts in Caleeforneea in 2001, thus stealing billions of dollars from the state's taxpayers and delivering us governator Ahnuld; 2) walked away with hundreds of millions of dollars from insider-sold stock just prior to the share price's collapse from over $50 to mere dimes & pennies, and 3) punked some 4,000 employees out of what in some cases was their entire life's retirement savings.
The take-home messages of the whole story?
- Enron's defrauders committed uniquely massive takings from thousands of innocent people, but similar types of people exist and are variously encouraged throughout the power-echelons of the corporate and political world;
- It took the complicity of many ordinary professionals for Enron to get away with their escalating fraudulence and criminality (and the key conformists did not prosper);
- What both Watkins and McLean did was simply and smartly air their skepticism, speaking plain, articulate truth amidst the hype -- basically, politely refusing the koolaid cup -- and this is something anyone who reads or writes here at DailyKos is capable of doing (and incidentally, both women are doing fine and have earned many nice speaking & writing gigs as a result);
- Exposing bad examples wakes people up and compels reform or at least temporarily quashes the most outrageous abuses;
- Not at all coincidentally, the Rethug/Bushco culture of aggression and corruption has tons in common with Enron, and therefore these same principles of truthtelling are the keys to the continuing cracking of the facade.
[OT - Prior to diarying, I called my Senators to urge them to vote no on cloture and to support the anti-Alito filibuster, to save Roe and the separation of powers -- and I am so encouraged that down to the last local office, their voicemails seem to be stuffed to the gills, their faxes are jammed and their servers are crashing...!!]