Innocence In A Time of Guilt

Enron filed for bankruptcy just after midnight on Sunday, December 2, 2001. 7 years, 5 months, and 30 days ago.

In that time, the following companies have collapsed or experienced short term liquidity crises: Bear Stearns, Lehman Brothers, AIG, Merrill Lynch, Wachovia, Citigroup, General Motors, Chrysler. Not one of these companies has experienced the absolute hell that Enron and its employees and executives have endured. Enron’s financial condition and rapid descent into bankruptcy was no more a result of fraud than any of these companies, yet Enron is today – 2738 days later -still paying the price for having the audacity to fail. If Enron were around today, would we even bat our eyelashes at their problems? Jeff Skilling did not take an enormous bonus when he left the company – yet valid bonuses issued at AIG incite medieval torch and pitchfork mobs. Ken Lay said Enron was in good financial shape and was eviscerated for it, while John Thain of Merrill Lynch spent bailout money on a new executive washroom.

The actions of Enron Corporation would be utterly routine if they had happened today.

During the Tech Bubble, there was a lot of commentary about how ordinary people were getting into the stock market. The phenomenon is even mentioned in The Smartest Guys In The Room. If the masses at the time were unsophisticated investors, then we can also expect them to have an unsophisticated (ie, irrationally angry) response to losing money. I believe this is where much of the outrage comes from – the lies, myths, and misunderstandings of Enron that still permeate our culture today. When the masses start screaming, the government listens (usually). When stockholders were told of AIG bonuses, every Democrat politician found a camera and decried the “greed” of these executives. One should never underestimate the power of a group of average people screaming.

So Enron lost money and people didn’t like it and the politicians were concerned about being re-elected so they agreed with the people who lost money, and Enron was prosecuted.

Great system, except it has nothing to do with justice.

The men we read about in the paper, like Kevin Howard today, are innocent. It is a tough sell. For so long we’ve been told that Enron was corrupt. But look around you. Is AIG being prosecuted? Merrill Lynch? Bear Stearns? Are there Presidential Task Forces at work? Are there conspiracy theories spouting up about these companies? No. And Enron was much better behaved than those companies.

Enron was innocent in 2001. It is innocent today. Kevin Howard was innocent in 2001. He is innocent today. He pleaded guilty because he was tired. He did not want to take his chances on a third trial (a third trial!). That doesn’t make him guilty, it makes him human.

The men who plead guilty in the Enron case will get no static from me. I completely understand. This justice system makes you do criminal things – like lie in court so you can be free. But since that is the game, I support the men who play.

Innocence is so hard to prove. Maybe Enron will never be vindicated and recognized for the excellent company it was. But as time goes by, maybe it will be seen as simply better than anything we have now.

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