Ignorance Was Bliss
The New York Times
Editorial
February 8, 2002
Two key masterminds of Enron's
meteoric rise and fall took center
stage at a dramatic Congressional hearing yesterday, and
the American people actually got to hear from one of
them.
Enron-watchers who have become impatient with the
parade of executives taking refuge behind the Fifth
Amendment must at least have appreciated the fact that
Jeffrey Skilling, the company's former chief executive
officer, gamely chose to testify before the openly scornful
investigative subcommittee of the House Energy and
Commerce Committee. Mr. Skilling's appearance was
lively but remarkably uninformative. While most
Congressional inquiries of this type hover around the
question "What did you know?" the Enron saga is
becoming a case of "What did you miss?"
Mr. Skilling, to the understandable disbelief of panel
members, said he thought he was leaving the company in
fine shape when he exited last August, and that he had
no idea Enron was about to implode because of its
ill-advised bets with off-the-books partnerships. And he
was shocked that Andrew Fastow, his chief financial
officer who earlier in the day invoked his Fifth
Amendment right to remain silent, had pocketed $30
million from the unseemly deals.
These claims were hard to buy from the financial whiz
who helped transform Enron from an energy company
into a trading powerhouse. Mr. Skilling's professed
obliviousness was undercut by Jeffrey McMahon, now
president of Enron. As treasurer of the company in the
spring of 2000 he met with Mr. Skilling to express his
concern about the inherent conflict of interest involved in
allowing Mr. Fastow to control outside partnerships
negotiating deals with Enron. The absurdity of the
arrangement came to life in Mr. McMahon's testimony
about his frustration at having to represent the interests
of Enron shareholders when negotiating deals on the
company's behalf with Mr. Fastow, his boss.
Mr. McMahon testified that Mr. Skilling had assured him
that he would fix matters. Mr. McMahon was then
reassigned to a different job, a switch that Mr. Skilling
told the lawmakers was purely coincidental.
The things that Enron's former executives claim not to
have known is enough to cause the public to lose faith
both in the canniness of corporate superstars and the
efficiency of office gossip. Mr. Fastow reportedly offered
Mr. McMahon's successor as treasurer a stake in one of
the partnerships, which allowed him to turn a $5,800
investment into $1 million in a matter of weeks. Yet Mr.
Skilling and Enron board members have said that they
had no idea company officers were receiving such
windfalls at shareholders' expense. We're thankful Mr.
Skilling had the gumption to testify yesterday, but not
grateful enough to accept his spin.
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