On Enron, See No Evil
New York Times Editorial
February 27, 2002
Jeffrey Skilling, the former Enron chief executive, does not like being compared to the captain of the Titanic. "I got off in Ireland," he coyly told the Senate Commerce Committee yesterday. He was alluding to the fact that he resigned last August, before Enron's ultimate collapse. Mr. Skilling, who had cashed in $66 million worth of Enron shares over the previous two years, still says he thought that he was leaving the company in fine shape.
As was the case with his earlier testimony before a House panel, Mr. Skilling's version of reality stood in stark contrast to the accounts of Jeffrey McMahon and Sherron Watkins, who sat alongside him yesterday. They are the Enron executives who dared raise concerns about the appropriateness of Enron's dealings with offshore entities controlled by company insiders.
When asked about suspect deals, Mr. Skilling either pleaded ignorance about details or said that his board and accountants had approved them. He also said he believed that the deals had been designed as legitimate hedges against risk and that he had been astonished to discover the degree to which Andrew Fastow, his chief financial officer and the partnerships' architect, had enriched himself. Ms. Watkins responded, saying that "Mr. Fastow wouldn't have put his hands in the Enron cookie jar" without at least Mr. Skilling's implicit approval.
Federal prosecutors may have found an ideal witness to help them reconcile the differing accounts: Ben Glisan Jr., who is reported to have been cooperating with government officials. Mr. Glisan replaced Mr. McMahon as Enron's treasurer after the latter had complained to top management about the partnerships. Mr. Glisan was allowed to invest in one of the partnerships by Mr. Fastow, turning $5,800 into $1 million within weeks. Facing serious legal liabilities of his own, Mr. Glisan has every incentive to talk to prosecutors.
Meanwhile, Treasury Secretary Paul O'Neill, who leads President Bush's review of corporate governance, has suggested bold steps to make executives more accountable: disallowing the use of insurance money to cover damages in shareholder lawsuits, for example, and lowering the legal standard to negligence, instead of recklessness, to punish executives who mislead shareholders. Mr. Bush's other economic advisers are said to be reluctant to go that far. A review of Mr. Skilling's testimony might strengthen their resolve.
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