I have been following the Enron trial with great interest as it’s slogged along in the courts and drawn in dozens of executives from the company and even more outsiders to share their perspective and experiences within the firm. There’s no question, the executive team at Enron did wrong, and did very wrong, consistently and constantly lying to shareholders and members of the company.
The two top guys of the huge financial house of cards that was Texas-based Enron, CEO Jeffrey Skilling and Founder Ken Lay, were convicted in May, 2006 of deceiving investors about Enron’s true financial condition.
I’m rather surprised that it took five months from conviction to sentencing, and Ken Lay is either up in heaven looking down at the proceedings (or down in the other place) as he passed away of a heart attack a few months ago.
But Jeffrey Skilling. Well… let’s first go through a quick refresher on what happened with Enron…
Enron Corporation was a high flier in the world of energy and its apparent success had great rippling effects across the United States. By buying and selling what it never really had, and various other extraordinarily complex financial shenanigans, the company managed to gain a market capitalization of over $60 billion and claimed revenues of $111 billion in 2000 alone. Grandmothers invested, stock mavens poured millions from pension funds and money market accounts into the wonderful world of Enron.
In California, the governor and his team saw Enron’s success and used that as a lever to deregulate energy throughout the state, in what ultimately proved a disastrous move that continues to cost California some of its economic vitality. Elsewhere other energy companies could only look and envy the excess of Ken Lay, Jeff Skilling and the rest of the Enron team. They were generous patrons of the arts both in Houston and throughout the United States, and were widely lauded as heralding the next generation of energy companies.
Until it all collapsed and the company stock dropped in just a few weeks to zero.
Enron hemorrhaged through every doorway and window in its beautiful corporate headquarters, but the real victims of the devaluation were employees and investors who had bought the dream and built their future retirement plans on the continued valuation and growth potential of Enron. Which evaporated.
For those thousands of people, I can only imagine the shock, horror and anger of having your retirement or even income yanked away by rich guys who doubtless laughed as they fleeced everyone and conned even their closest colleagues. For these folk, there can never be enough payback for someone stealing their dreams.
Does it really make sense to sentence Jeffrey Skilling to 24 years in prison? Is that going to help recover the money from anyone’s lost investment? Is that really going to be a message that other crooked executives will hear and heed?
For the record, this sentence is the second harshest “white collar” sentence ever handed down from the bench, after Worldcom CEO Bernie Ebbers (who received a 25 year prison sentence).
What if, instead of tossing Skilling into a cell and throwing away the key (he’ll die in prison, there’s no question in my mind), he was required to contribute to society, to work through a program like SCORE helping other companies learn how to grow (honestly, of course!) and then was forced to pay every penny he earned into a restitution fund? Like Ebbers, Skilling is an extremely sharp manager and executive, and I believe that there’s a workable solution that would let him contribute positively to society and pay back maybe just a few pennies on the dollar from the billions in lost investment capital, but hey, that’s better than zero cents on the dollar, isn’t it?
Am I missing something here? Do you believe that he should have received this harsh sentence, stuck stamping out license plates or twiddling his thumbs until he dies, or do you think there’s a way by which he could still make some sort of positive contribution to society and maybe, just maybe, try to balance the karmic scales a bit?
Surprisingly few bloggers have even mentioned the Skilling sentence, other than in a sarcastic manner (for example, Pajamas Media). A few ask the same question I’m asking, though, notably The National Ledger, and Tom Peters shares his own perspective, having worked with Skilling years ago. Still, why aren’t more people talking about this pretty important business and social topic?
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