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To: Thomas Mercer-Hursh who wrote (50391)	2/15/2002 12:56:25 PM
From: Mike Buckley	Read Replies (3) \| Respond to of 54805

Thomas, Obviously they are aware of it at some level ... but if those millions ... out of $100 billions ... are characterized in some reasonable way You're characterizing the off-balance sheet transactions as sufficiently small that they should be viewed as a detailed level that board members should be held accountable for not knowing about those "details." If they were of such relatively small detail, why are they at the core of the demise of Enron? And if they are at the core of Enron's demise, why is it that the board didn't know about them in sufficient detail. Why shouldn't we hold the board accountable for not knowing about them? and the company's auditors have certified the validity of those characterizations, then there is no reason to expect the Directors to know the details. The board approved hiring the auditor while at the same time approved hiring the same firm to provide much more profitable business services. It's not as if the board was requring a totally independent audit. Ultimately, the responsibility comes back to the board on virtually everything. That's where the buck stops. I wish it were illegal to use the same firm to audit financial statements and provide other services. I don't like the fact that my other investments are in companies whose board allows audits that aren't completely independent. --Mike Buckley

To: Thomas Mercer-Hursh who wrote (50391)	2/15/2002 1:48:41 PM
From: EnricoPalazzo	Read Replies (1) \| Respond to of 54805

Obviously they are aware of it at some level ... but if those millions ... out of $100 billions ... are characterized in some reasonable way ... which we can assume since no flags went up at the SEC or from the investment community ... and the company's auditors have certified the validity of those characterizations, then there is no reason to expect the Directors to know the details. I guess that depends on what the meaning of "expect" is. In one sense, expectation is about rationally predicting various outcomes, with no normative connotations. I expect it will rain tomorrow. I expect interest rates to fall. etc. In another sense, expectation is about moral obligation, presumed or otherwise. If you are going to work late and miss dinner, I expect you to call. If you're going to have an affair with an intern, I expect you to be forthcoming about it under oath. This kind of expectation certain is more normative than predictive, or perhaps it's predictive insofar as it's also normative. Essentially, the presumed moral obligation is so strong that it would be unthinkable not to predict its satisfaction. Now there are several schools of thought on this matter. Some would say that if you can't expect (predict) some one's peers to act in a particular manner, you can't expect (morally require) them to do so. In other words, people need to be judge in the context of their peers. This is, for instance, the way that malpractice law frequently operates--a doctor has committed malpractice only if his behavior falls beneath the general standard of practice of his peers, no matter how objectively good or bad that standard is. Likewise, we might say that the ignominy of the average German citizen ca. 1940 or the nobility of a person who marched on Washington is somehow muted because, hey, his peers were doing likewise. We couldn't "expect" anything different. More to the point, we might say that the irresponsibility of a financial advisor in buying TechCorp System Networks at a P/E of 2000 in 1999 is diminished because, hey, everyone did it. Now the reason that I, and it seems most people on this board, disagree with this thinking is that it obscures man's ability to exercise free will, regardless of what his peers do. If you have a job to do, you have a job to do, regardless of whether your neighbor is doing his. That's the case whether your job is overseeing a corporation, raising a child, loving your spouse or just being a decent human being. Moreover, Directors are amongst the most privileged and well-compensated members of society. We as shareholders pay them a pretty sum of money to look after our interests. We don't tell them how to do their job, or what transactions to look it, but we do ask them to do their job, i.e. "look after the interests of shareholders". With that privilege comes a great deal of responsibility, and I have no problem with judging people according to how they adhered to their responsibility. This isn't about, as some have suggested, "waiting until the facts are all in". Innocence until proven guilty is an important concept in law, where the impact of an adverse judgment is very real and profound. But in everyday thought, it is absurd to withhold all judgment until we know every facet of the events. We will never have that knowledge, both because of the vagaries of memory, and because of the deliberate effort to conceal the facts, and prevent them from ever coming "in".