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?
Useful references for further reading:
I mentioned the Skilling sentence briefly the other day on my blog since I am one of the ex-Enron’ers who lost my job and a significant amount of “paper riches”.
Ideally, there would be a way for restitution to be made in a way that benefits society while serving justice to the convicted. And if Skilling feels strongly about how things turned out, I’m sure he could work on starting some sort of program in his copious free time that he’ll have. But the way our legal system is structured doesn’t seem to make that much of a possibility.
Do I feel he deserved the sentence? Yes. I have no doubt he knew exactly what was going on. I’m more angry that Fastow was able to escape with a sentence as light as he did. He’s the only ringleader of the three that actually admitted doing it!
The number of lives and retirements that were lost to downright fraud are incredible. Had Skilling been a stockbroker who defrauded his clients in the same way, there’d be no question of his sentence being just. I don’t think that a CEO who runs his company as his own ego-driven playground to the detriment of thousands of employees is any different.
But generally, I don’t have any strong feelings one way or the other… 🙂
Normally, I would tend to agree with you that this sentence for a white collar crime is too harsh. Is there really any reason for him to rot away unable to contribute anything back to his victims? BUT, there is one very important thing I think you’re missing here and that is he still doesn’t admit ANY guilt!
How in the world could he teach others good management skills and as you added “honestly, of course” when he still thinks he’s guilty of no dishonesty! (sorry for the triple negative)!
I would say 10 years for something like this for someone who admitted guilt and had remorse. But in this case even though I think it’s extremely harsh, I can’t really argue with it.
I know the conventional wisdom and the media coverage is very negative against the Enron execs, but I tend to feel sorry for them because they are mostly guilty of poor management of the business and being on the wrong side of the politics of corporate corruption. They truly pushed the envelope on accounting but felt they were ok because everything was vetted by the CFO (the real crook), Accountants and lawyers. I am not saying they are not accountable, but they aren’t murderers. Also, its hard to feel sorry for people that invested all their retirement funds in their employers overhyped stock. They were drinking the koolaide just like the enron execs. Lay himself rode his Enron stake right into the ground while being heavily leveraged.
For a different perspective on the enron case I suggest checking out a blog of a Houston Lawyer:
He should have gotten life. If he feels contrite, he can find ways to do good deeds while in prison. If he does enough good deeds, perhaps parole in 20 years could be possible.
Enron could have, and may have, killed people by engineering black-outs in CA. I understand these were actions of others in the company, but they were part of the culture created by Skilling and Lay. Some people, after the trauma of losing everything, decide there is nothing left to live for and end their lives or take from others. Skilling, Lay, and Fastow are culpable. They are directly responsible for the material loss and hardships of thousands of people. White collar crime is never victimless. This was not a petty offense. They were smart people and knowingly ruined lives. If this had been due to negligence, I would be more forgiving, but these people dedicated themselves to malice for the sake of greed. They should be judged accordingly.
Corporations and managers have responsibilities to their employees and society. There are an abundance of good managers. We should find and promote their message rather than worrying about what Skilling may be able to teach. More good would come from putting him and Fastow in a cage for all to see; showing our future business leaders that there are consequences for knowingly doing harm. Shame still works.
Suggest everyone view the free downloadable video documentary “Enron – the Smartest Guys in the Room.”
“but they aren’t murderers” I would say that is incorrect. Ken Baxter, according to many reliable accounts was “suicided.” There were numerous forest fires in California that raged out of control while the Enron-ordered blackouts were perpetrated. There could have been deaths associated with those fires.
Skilling and Enron top execs got crazy and deluded with the love of filthy lucre. Their judgment and ethics went out the window. The whole nature of Enron’s business became characterized by fantasy and myth. None of these “brilliant” liars, cheats and theives were able to assess their own grossly unethical business decisions. I am only sorry that ALL of the execs in investment banking firms, and Vinson Elkins law firm were not indicted and sentenced too. I would also like to know how much of a hit the state of Texas public retirement funds took – Teachers Reitrement System and Employees Retirement System.
Skilling seems a bit sociopathic to me. He seems to have no conscience, yet I hold psychopaths and sociopaths fully responsible for their actions.
This kind of debacle can play out again and again in other corporations, though the corporate cabal is concentrating and consolidating to a relatively small corrupt group of people who crave to own and rule the world.
All the Enron employees who lost their pensions and jobs also got caught up in the money lust. They were locked out of cashing in their stock while the execs were able to dump stock and that is of course disgusting.
I have an increasing distrust of big business and corporations. Most of the top people simply have no clue about the founding principles of the USA and love of country. They are internationalists who do not one bit raping the economy of the USA and turning our middle class into third world peasants. Fascism R US.
Let Mr. Skilling teach a literacy class in prison and let him serve his full sentence.
YES, it makes sense to sentence Skilling to 24 years in prison, (though life would be better). In fact, I can’t recall ever being so passionately eager to see a convicted felon serve his time as I have been with Jeff Skilling. At long last! Ken Lay escaped justice, but at least this creep won’t. And I’m not even the vindictive ‘type’! Your idea of “payback” is idealistic piffle, I’m afraid. Nice try, but I’m unmoved. Take another look at all the lives this man wrecked. What would be a fair sentence to serve for each one of them? A day, a week, a month, a year, what? Do the math, and then consider the fact that the sentence is actually quite lenient.
YES, I BELIEVE HE DESERVES THIS SENTENCE. My heart goes out to the mommies and daddies who blew their brains out after losing all that hard-earned 401K money, and the kids who they were saving up for now have nothing. What a shame! Another example of The Man screwing decent Americans for God Greed and the Almighty Buck. I don’t get it. A guy holds up a gas station and gets life without parole for a lousy $500 that he needed to feed his family, but we let these white collar guys go after bilking companies and workers of zillions of dollars, and then we feel sorry for them. I don’t. Let the gas station stick-up guy out! Put these bumps away for a long time! They’re the real crooks!
I think the problem is in the title of Dave Taylor’s comment. For what I understood reading his post, he is not saying Skilling does not deserve a sentence, he is asking us: do we benefit from THIS sentence? Are his victims getting any benefit from it, except for a sense of legitimate satisfaction in knowing he is now suffering in jail, after having caused so much pain. So, Taylor is not making a case for Skilling, but for us. What would have been best, more effective, more of a compensation and reparation for society and the victims themselves? It is not a matter of being “moved” by Skilling’s destiny.
I think Taylor may have a point.
When asked at his interview to get into Harvard if he was smart, Skilling answered: “I’m fucking smart.” Maybe we could have used that.
Yet, being a sociopath, a patholical liar and a manipulative genius, it is not unlikely that Skilling might end up controlling the very same people who think they are using him for their own benefit.
hope my english made sense,
Interesting idea, but why apply it only to Jeffrey Skilling, and not other humans serving their time in prison, who actually may be contrite and have admitted their wrong-doing? What makes Jeffrey Skilling so special? I’m all for leniency and creative solutions, as long as they are applied universally to all prisoners, and not just the (formerly) rich. I don’t have any money to buy *selective* compassion. 🙂
I think Skilling should work through a program like SCORE helping other companies learn how to grow, etc etc. But at night, he should be forced to participate in various gay/bdsm movies for the rest of his life. And do dvd signings. I’d buy one of those.
LET JEFF GO!!!
Are you serious? He deserves more time. Watch the tapes, he is a very good liar. If 23 million paid to his defense team resulted in conviction they must have tried every trick in the books. An appeal to the Supreme Court is another last ditch effort to keep justice denied. He keeps trying to get off not admit he cheated and ruined others life long work. A guy like him needs 24 years to think about it!
I’m not a religious, moral, economic, financial, or law dynamo. Infact, I know barely anything about most of those subjects. This is all in gut feeling – in what I’ve brought myself up to believe and what people around me have taught me to establish my own sense of morals and justice. Why would the world want him to help out? Does he really deserve the satisfaction of knowing that through all the wrong he did and people lives he helped to ruin, that he should have any source of redemption? I think not. I think he should brood in self-loathing until the day he dies. He knows what he did was wrong, regardless of what he says in attempts to lessen his punishment. And to any of his inmates in prison: do you really want to give him the satisfaction of dying? I hope you don’t – give him the hell he deserves on this earth until he dies of natural causes because he received more heaven here than on earth than the very, very vast majority of the rest of us will get while we are still alive.
i belive jeff skilling has done he time at that fci its time for jeff to gat out, and do some good out here.that man is a new jeff skilling he can do some good thing out,