Want to learn about corruption and influence-peddling on the House Appropriations Committee–one of the very most powerful committees on the whole of Capitol Hill?
David Sirota has quite a bit to say on the subject, in a wide-ranging article covering everything from Jack Abramoff to Mad Cow Disease. Highly recommended.
It doesn’t seem fair–all these years before the trial, Lay and Skilling found guilty…and then, because the verdict was under appeal, Lay’s record is apparently to be cleared (at least in the legal system) just because he happened to drop dead.
The Houston Chronicle reports that not only will his conviction be vacated, but the government’s efforts to recapture $43 million of ill-gotten gains are likely to be stymied.
Cynic that I am I have to wonder if that was really Ken Lay’s corpse; it just seems a little too convenient. I hope there’s confirmation via DNA testing.
I am not a vengeful person–but I am galled that not only did this criminal continue to live high on the hog but he escaped justice in the end–while thousands harmed by his greed were not so fortunate. Even as late as his trial, according to a widely reported news story,
Lay also defended his extravagant lifestyle, including a $200,000 yacht for wife Linda’s birthday party, despite $100 million in personal debt and saying “it was difficult to turn off that lifestyle like a spigot.”
I do take some comfort in knowing that death will not save his reputation, even if it protects the fortune of his estate (which, according t some rumors, is still a large fortune–while other sources say he was heavily in debt and there isn’t anything left).
Meanwhile, GWB’s appearance on Larry King Live puts to rest any question about the relationship between the president and Lay–a relationship that the White House tried to minimize earlier in the week:
KING: Because I mean you knew it pretty well from Texas, right? BUSH: Pretty well, pretty well. I’ve known him — I got to know him. People don’t believe this but he actually supported Ann Richardson in the ’94 campaign…Yes, he’s a good guy and so what I did — then did was we had a business council and I kept him on as the chairman of the business council and, you know, got to know him and got to see him in action. One of the things I respected him for was he was such a contributor to Houston’s civil society. He was a generous person. I’m disappointed that, you know, that there was — betrayed the trust of shareholders.
In that same transcript, Lay himself offers this rather telling bit:
We were competing with the very best and biggest companies in the world for the best talent and they loved working at Enron just like I did. But I grieve for all that they’ve lost and we, I mean even having lost what we’ve lost, I mean we are so much better off. My family is so much better off than most of them and it just, it pains me each and every day of my life.
The transcript is worth reading. While superficial as TV so often is, it gets in some very interesting quotes from a wide range of sources: Lay family friends (including the former mayor of Houston, who lauded Lay for his charitable work), employees who were cheated out of their retirement, and Skilling’s lawyer, who I found incredibly unctuous.
The poster boy for crooked business, Enron’s Kenneth “Kenny Boy” Lay, died today, just a few weeks after he was found guilty in the massive fraud/ethics case.
Already, the White House is denying that there was a genuine friendship (sound file) between Lay and George W. Bush. But Bush was a long-time high-end fundraiser for GWB, and it was in fact GWB who started calling him “Kenny Boy.” So the denials don’t have a lot of credibility.
But the real question is not whether Lay and Bush were close personal friends; the real issue is what kind of future business climate can we create together, where future Enron scandals simply don’t gain any traction.
If you’d like to help create that climate, I invite you to sign the Business Ethics Pledge.
Bush also told federal prosecutors during his June 24, 2004, interview in the Oval Office that he had directed Cheney, as part of that broader effort, to disclose highly classified intelligence information that would not only defend his administration but also discredit Wilson, the sources said.
There it is–right from the pages of the National Journal. The government has known for a year and a week that GWB directed Cheney to embarrass Wilson by illegally disclosing classified information. Cheney chose to carry out this directive, through the help of Scooter Libby and probably Karl Rove, by leaking Plame’s CIA status to friendly reporters. A total violation of the law, on top of hundreds of other violations.
Will someone please tell me why both parties aren’t setting up impeachment hearings? Some independent voices have been calling for impeachment for years–if you’d like to join them, click here. GWB and Cheney have repeatedly engaged in criminal activity. When will enough be enough?
You must have heard this one by now. Company after company is involved in schemes to make their executives rich by issuing stock options after the stock price jumps, but backdating them to appear that they were issued before the rise.
Option timing abuse first came to light earlier this year after a number of media reports questioned why executives had exceptionally good luck in obtaining stock option grants just before large increases in the related stock price. Erik Lie, a University of Iowa finance professor issued a study that claimed as many as ten percent of all option grants appear to have been backdated. A similar Merrill Lynch study found that 40 companies in the S&P 500 likely backdated their options.
Hey, people–if you already know that insider trading–buying or selling based on information you have that will affect the stock price but isn’t yet public–is enough to go to jail, surely it should occur to you that this sort of thing is essentially insider trading coupled with outright fraud.
A UK trade weekly for lawyers, Legal Week, has a wonderful article encouraging businesses to base their policies not merely on compliance with ethics laws such as Sarbanes-Oxley and its non-US equivalents, but on creating a culture of ethics that far exceeds the legal minimum.
When we focus on compliance alone, we are setting the bar too low. Adherence to the regulations becomes an acceptable standard to work to and we make it difficult for employees to deal with issues not covered by the rules. Something more holistic is increasingly required.
If we move the focus towards ethics and the need to change behaviour, we are inevitably required to humanise the subject matter and begin to introduce a context to the content. Properly built and implemented ethics education becomes about being part of a better business, about improvement and moving towards something.
Oddly enough, the author, Chris Campbell, cites a tobacco company as a positive example. To my mind, there’s nothing ethical at all about selling tobacco–but certainly the principle holds.
He proposes three questions to evaluate any action:
. are my actions potentially open to misinterpretation?
. are my actions likely to negatively impact others? and
. what will I be required to do as a result of my actions?
This is too weird: The New York Times went back and forth with senior General Motors executives about a letter to the editor from a GM vice president, attempting to rebut a highly critical article by Thomas Friedman. The letter said accusations in the column were “rubbish”; the Times refused to allow that word in the letter.
Writes the PR guy, Brian Akre,
Now, you’d think it would be relatively easy to get a letter from a GM vice president published in the Times after GM’s reputation was so unfairly questioned. Just a matter of simple journalistic fairness, right?
You’d also think that the newspaper’s editing of letters would be minimal — to fix grammar, remove any profane language, that sort of thing. Not so.
Speculation about this on the SF Chronicle blog–from a commentator who thinks the Bush administration has done a good job on corporate crime (a premise with which I strongly disagree)–but his lawyer friends who actively cover the trial think it’s a real possibility.
It wouldn’t shock me–I don’t think he’s been that concerned about his legacy, as the rampant cronyism that’s been all over his administration demonstrates.
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Shel Horowitz is the award-winning author of Principled Profit: Marketing That Puts People First and five other books, and the creator of the Business Ethics Pledge to make crooked business as unthinkable in the future as slavery is today.
Just after Enron’s Skilling and Lay are found guilty, a paper in Alberta, Canada, accuses the company of using Alberta as a testing ground for the shenanigans that created havoc in California’s energy market.
It’s been shown that Enron grossly inflated power prices in our province. Apparently this ploy was given the code name, Project Stanley, derived from the name of our top hockey trophy.
Although a probe into Enron by Canada’s Competition Bureau in 2000 found no fault with the corporation, new evidence has reportedly surfaced, showing that there was bragging within its walls about how it had artificially driven up electricity costs in Alberta.
Meanwhile, The Economist reports,
A court in Seoul sentenced Kim Woo-choong, the former boss of Daewoo Group, to ten years in prison and ordered him to forfeit 21 trillion won ($22 billion) for his part in South Korea’s biggest corporate scandal. Mr Kim, who founded the chaebol in 1967, was found guilty of fraud and embezzlement. Daewoo collapsed in 1999 with debts of $80 billion.
Daewoo was once the most prominent of Korea’s industrial giants.
Meanwhile, a Hong Kong newspaper offers a general challenge to the long-held culture of family controlled business in Hong Kong and China:
Overdone patronage begets corruption, begets poor business culture, economic waste, social dysfunction. Getting rid of the patronage system has clear benefits for all and managerialism can in some cases undermine the worst aspects of the family-run model. But, like all coins, this one can be flipped. On the other side are the lessons learnt from the US shareholder model which provide specific warnings.
But the paper warns that the Enron verdict proves the corporate model favored in America…
can be just as arrogant and irresponsible as the most parochial family business. The bottom line is that the shareholder model as practiced in the United States is no bulwark to an elitist, irresponsible and corrupted cabal of managers ascending to a position of omnipotence and over-riding due process, ignoring the law, and marginalizing the standards of ethical business practice.
As scandal after corporate scandal was revealed, all leading straight to the CEO’s large, but mostly unused desk, calls for his head were answered with his sacking. Used to years of bad results the shareholders – by now nearly 70% of all Australians – welcomed the news, but when he was awarded a $50 million payout, it was the final straw.
And one final meanwhile, here at home, wrangling continues over whether the FBI had the right to raid the office of a sitting Congressman accused in a bribery investigation. Frist says the FBI was justified; Hastert and DeLay say they overstepped. And just to show that the GOP doesn’t have a lock on ethical failure, the representative in question is William Jefferson, Democrat of Louisiana.
I promised on May 24 I’d post the results of my press release offering to comment on the Enron verdict. And being a man of honor who writes about ethics, I’m keeping that promise.
Results were less than stellar. An email drop to some 700 outlets resulted in *one* radio interview–admittedly, nationally syndicated and for a full hour. PR Web claims 36,997 people saw the press release (which means they saw at least the headline) and 398 media outlets picked it up but none used it. This is about half the number of page views of my previous two releases posted there, but both of those have been up quite a bit longer.
But here’s the really astonishing thing: not only did my carefully crafted press release (vetted with a PR expert before it went out) fall flat, it seems that almost no one was looking for comments on this big, big story.
Watching Google-flagged alerts for business ethics and related topics in the days following the verdict, I found only one case of a reporter turning to expert sources to comment on the case: the South Bend, Indiana paper, interviewing two professors from Notre Dame and another local university.
There were quite a number of reporters who made their own comments, all of them roundly critical of Lay and Skilling. But nobody was talking to experts.
Strange!