ENRON REARS ITS HEAD AGAIN
December 29, 2005
Editorial
The collapse of Enron seems so long ago. Much has happened in the ensuing four years, so it is easy to forget the first in a string of corporate scandals that shook our collective trust in business leaders. For an indicted executive, conditions would seem perfect for keeping a low profile ahead of trial.
So it was a surprise to see Kenneth Lay, the company's former chairman, claim in a recent speech that prosecutors disregarded the truth. Mr. Lay told a Houston audience that Enron was "a strong, profitable, growing company even into the fourth quarter of 2001." That, of course, was the same quarter in which Enron declared bankruptcy.
Judging from his speech, poor Mr. Lay and Enron were the victims of a couple of bad apples inside the company and after-the-fact political scapegoating. According to Mr. Lay, the Justice Department's Enron Task Force is trying to criminalize normal business practices. But it's unlikely the Houston speech had anything to do with Mr. Lay's desire to make the world safe for Enron's creative accounting. It's about legal strategy and the Lay team's desire to go on the offensive.
Unfortunately for Mr. Lay, there have been a couple of hitches in this public relations campaign. Yesterday, Enron's former chief accountant, Richard Causey, pleaded guilty to a securities fraud charge in a plea bargain that could get him reduced jail time. In exchange, Mr. Causey will be expected to help prosecutors in the trial - scheduled to begin next month - against Mr. Lay and Jeffrey Skilling, the former Enron president.
Meanwhile, the Texas bankruptcy judge still sifting through the wreckage of the company has ordered about 40 former traders to return $20 million in bonuses they received as the company was going belly up. In total, the company paid roughly $105 million in bonuses in the days immediately preceding its bankruptcy filing. The ruling describes Enron employees delivering bonus checks by plane to get them in the hands of traders until the last possible second.
The real losers in the Enron debacle, its rank-and-file employees and shareholders, are slowly cobbling together some compensation through such rulings. Let's hope that, along with the upcoming Enron trial itself, dissuades executives at other ailing companies from granting 11th-hour bonuses while the company is teetering on financial disaster.
So far, unfortunately, the multitudinous corporate convictions of late don't seem to have led to all that much improved behavior. Businesses continue to lavishly reward executives with excessive bonuses, even in the face of bankruptcy - Delphi Corporation comes to mind. If we could have a New Year's wish, it would be that perhaps this time, with the Enron trial, executives will draw the lesson that sometimes excessive greed doesn't pay.
nytimes.com |
