Skilling's Jail Term
November 6, 2006

Twenty-four years for Skilling. I have mixed feelings about that. On the one hand, it seems a fair punishment for the calculated and pervasive swindling Enron was engaged in. On the other hand, I can understand how he probably feels like a sacrificial lamb (or perhaps a sacrificial wolf) since so few of the many other corporate honchos out there swindling the public have been prosecuted.

Yes, there have been some significant jail terms. Bernard Ebbers got 25 years in the can for his role as head crook in the WorldCom scam. And John Rigas, ex-CEO of Adelphia Communications, was given 15 years. Martin Grass (Rite Aid) received eight years, Samuel Waksai (ImClone Systems) got seven years, and Sanjay Kumar (Computer Associates) got seven years.

But those six are just the tip of the iceberg. Corruption and fraud has been rampant ever since the Internet boom began. Like most booms, growth breeds opportunity and opportunity breeds greed.

Since Skilling is 52, his 24-year term is pretty much a life sentence. Judge Lake, in issuing the sentence, noted that Skilling's crimes had, in effect, imposed "life sentences of poverty" on thousands of employees and shareholders.

Skilling was part of a group that almost certainly defrauded thousands of shareholders and employees of billions of dollars. He was a thief - a very big-time thief. Because Enron went bankrupt, those people will probably never see a nickel of their losses restored to them. That's not good.

I'm sure Skilling believed that in promoting his company's stock (fraudulently or otherwise) he was acting "in the shareholders' best interests." Isn't that what they say? And I'm sure he believes Enron's bankruptcy was not the result of all the lies he was promoting but the loss of investor confidence that followed the media scrutiny and government actions. He probably believes that he and his cronies could have made the company solvent if they had just been allowed to continue doing what they were doing.

But what they were doing was cheating and lying and falsifying information - doing anything they had to do to keep Enron's stock price high while company sales were sinking and profits were nonexistent.

You wonder how people could have invested in Enron in the first place. (I know a very smart investment expert who recommended Enron early on.) The company's method of creating profits was never anything more than a black box. For years, everybody believed the preposterous stories Enron's PR people were telling. It took the courage of a young woman, early in her writing career, to look at the emperor and ask why he had no clothes on.

Then everyone suddenly knew. Then. But what about before? There was the same evidence. The same indecipherable black box. Why hadn't all the more experienced analysts and investigative reporters noticed something was askew?

posted by M. Masterson @ 2:25 PM,

1 Comments:

At 1:11 PM, Anonymous John said...

Why hadn't all the more experienced analysts and investigative reporters noticed something was askew?

Uh... you mean all those brilliant analysts that tagged every company as a "buy" while the Nasdaq tanked a few years ago?

 

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