2002-01-27 23:33:52

How is it possible for so many people to engage in fraudulent activity? These are affluent, highly educated people who live in nice houses and drive nice cars. How can so many people spend their days working at activities that now so many now hold in disdain?

Back in December when ENRON first announced bankruptcy, I was very troubled because I read that a few days before filing for bankruptcy, approximately 50 million dollars was doled out in bonuses to managers. I calculated that if every manager received an equal amount, they would each get on the order of $100,000 apiece. At the same time the company was laying off thousands of other workers.

Why do managers get a lucrative bonus when the company is going bankrupt? Why do the people in charge of the company get rewarded while the lower echelons get pink slips. There were stories of longtime workers having lost their retirement savings. And yet the managers get giant bonuses? For bankrupting the company?

Executives told employees not to sell their ENRON shares, while they themselves sold off their own shares. Kenneth Lay, the CEO and a known good friend of George Bush, was told in a letter by a high level employee (letters published by the Washington Post):

[after laying out a bunch of deals that went sour]

[...] It sure looks to the layman on the street that we are hiding losses in a related company and will compensate that company with Enron stock in the future.

I am incredibly nervous that we will implode in a wave of accounting scandals...

Is there a way our accounting guru's can unwind these deals now? I have thought about how to do this, but I keep bumping into one big problem - we booked the Condor deals in 1999 and 2000, we enjoyed a wonderfully high stock price, many executives sold stock, we then try to reverse or fix the deals in 2001 and it's a bit like robbing the bank in one year and trying to pay back 2 years later. Nice try, but investors were hurt, they bought at $70 and $80 dollars looking for $210/share and now they're at $38 or worse. We are under too much scrutiny and there are probably one or two disgruntled "redeployed" employees who know enough about the 'funny' accounting to get us in trouble.

and yet soon afterwards Ken Lay sent out the following email to all employees:

[...] All of you know that our stock price has suffered substantially over the last few months. One of my top priorities will be to restore a significant amount of the stock value we have lost as soon as possible. Our performance has never been stronger; our business model has never been more robust; our growth has never been more certain; and most importantly, we have never had a better nor deeper pool of talent throughout the company. We have the finest organization in American business today. Together, we will make Enron the world's leading company.

Imagine, after reading that letter from the person at the top of your organization, what faith you would have in your company. Yet he's fully aware that the company is mired in trouble.

The government has begun to seek enquiries into what happened. Documents have been destroyed. Half the justice department, and half the legislature are recusing themselves from the investigation due to conflicts of interest.

The press makes much of the legality of what has happened. I'm not concerned with laws. I'm concerned with people who knowingly and willingly act unethically. I want to know WHO ARE THESE PEOPLE? What did they learn in business school?

This week, a former ENRON high level executive who left the company before the trouble started, was found dead in his car. He left after "clashing mightily" with other management about ENRONs dubious business practices. He was scheduled to testify before congress. He had two young children. Allegedly, he committed suicide.

When I think of all the people at ENRON who engaged in deceptive and manipulative behavior I also think of the people who acted during September 11th to help save the lives of strangers. People who are working to make positive contributions to the lives of others, people who we consider heros through their everyday actions. It seems to me the people at ENRON must have lost any real sense of meaning in their work. Everyone one of us should question how our occupation takes on real meaning in the world. In that sense, rich ENRON executives may have caused financial bankruptcy for thousands of employees beneath them, but in the act, they morally bankrupted themselves, and that is far worse. Poor people are easy to spot. Rich morally-bankrupt people are not. That's why I wish I could know who they are.