June 2, 2006

Enron.

Enron, Enron, Enron, Enron, Enron.

14 comments:

Sloanasaurus said...

Sometimes people pooh pooh property crimes - they say they are nothing compared to a rape or murder. However, I think property should be protected with the same zealousness - remember "life, liberty, property...." (the socialists on this board hate that phrase).

The crimes committed by Lay and skilling should be considered mass property crime, and should carry very heavy penalties.

MadisonMan said...

Considering the very heavy financial penalty that many Enron investors/401-Kers got slapped with, I think the Lay/Skilling parties should be left with very very little. And then they should be jailed for a long time.

I sometimes wonder: will George Bush, as he leaves office, pardon Ken Lay?

Bruce Hayden said...

You should go on and read some of the author's older posts on the subject. He makes some interesting points - that I disagree with. But they do put his post in perspective.

IMHO, the problem is that so many are hurt by the actions of unscrupulous people at the top of companies like Enron. Civil law just doesn't always suffice, esp. when they can hide some of the benefits, plus possibly have the refuge of bankruptcy (that has been tightened up over the years, in response to previous abuses of such).

If I knew that Ken Lay and his ilk would be working for the rest of their natural lives to repay what their averice caused, and while doing it, they would be living like the rest of us, then I wouldn't have as big of a problem with abolishing criminal prosecution of this sort of crime. But he wouldn't, so, this is the next best thing.

Ann Althouse said...

The link is to the blog generally. There are a ton of posts. Keep scrolling.

Dave said...

Two observations:

1) Sentencing Lay and Skilling to life seems to equate their crimes with those of murder and treason. That seems ludicrous.

2) Regarding those who lost "everything" in the wake of the Enron bankruptcy: financial prudence suggests that one's assets be diversified. Why should Skilling and Lay be punished for people's failure to properly manage their assets?

The obvious rejoinder to point #2 is "Lay and Skilling lied to their employees about the health of their company" but this is entirely unconvincing. No company is so immune from the vagaries of competiton or other unpredictable events that its financial health is reason to have all of one's eggs in one basket.

Finally, doubtless someone will read my comments and reply "well, that is not how the law works." Of course, I care little how "the law" works. What I care about is the apparent notion that high-level executives are suddenly deemed responsible for the financial prudence of their employees' personal finances.

Too Many Jims said...

Two observations on Dave's observations:

1. I have seen it reported nowhere that Lay and Skilling will be sentenced "to life". Now given that they were convicted of a number of counts and each of them is above the age of 50, it may "amount to a life sentence" but that is not the same as being sentenced to life. No, what they did is not the same as murder but should we treat them different than someone convicted of, say, 10 counts of grand larceny?

2. The fact that ex-Enron employees were not savvy enough to diversify their 401ks does not make Lay and Skilling more culpable. At the same time, the ex-Enron employees' errors do not exonerate Skilling and Lay. We don't absolve con artists of wrong doing because their marks were gullible or stupid.

Ann Althouse said...

"Sometimes people pooh pooh property crimes..."

Well, look at what people will do with their bodies for money. Obviously, if you think the human body matters, property matters too.

Dave said...

"Obviously, if you think the human body matters, property matters too."

I'm not sure I follow the argument here?

Yes, property matters, and yes the human body matters....and so? What?

nunzio said...

Heavy prison sentences deter these types of crime. Send these guys to a real prison for a real long time. They're more worried about their asses than their assets.

Jake said...

Enron was going broke because they picked a bad business model. What they wanted to do did not work. The proper thing to do was to declare bankruptcy and layoff the employees.

Rather than do that, the executives falsified their financial statements so that the banks wouldn’t foreclose and the companies could still get money from the investors.

Who were the major beneficiaries of this fraud? Surprisingly it was the employees. They got to keep their jobs another 12 to 18 months longer than they should have. The losers were the banks and the investors.

SippicanCottage said...
This comment has been removed by the author.
Eli Blake said...

Jake:

Who were the major beneficiaries of this fraud? Surprisingly it was the employees. They got to keep their jobs another 12 to 18 months longer than they should have. The losers were the banks and the investors.

You're wrong in so many ways.

First, the employees would have been better off to have lost their jobs 12 to 18 months before the collapse, when the economy was still creating jobs at a record pace. Instead they were dumped into the middle of a contraction in the economy. Some of them still don't have jobs, even today.

Second, may of the employees were the investors. As part of their compensation, they had like most people a company pension account. Those accounts were, however, loaded with Enron stock. And to make things worse, they were prohibited from selling it even as the company was collapsing (all the other investors, if they were watching closely enough, at least were able to salvage something.)

To claim that the employees were beneficiaries in all this is like claiming that if the exterminator accidentally starts an electrical fire that burns down your house, then you came out ahead because of how completely he got rid of your termite problem.

sonicfrog said...

♫ ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON

SKILLING SKILLING

ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON

SKILLING SKILLING

ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON ENRON

IT'S KEN LAY OOHHHHH KEN LAY ♫

Bruce Hayden said...

Jake said...

"Enron was going broke because they picked a bad business model. What they wanted to do did not work. The proper thing to do was to declare bankruptcy and layoff the employees".

The problem was that instead of doing that, the execs hid the problem and kept hiring, driving up the stock prices when, if they had been honest, they would have been going the other direction in response to the realization that the business model was not sustainable.