Jeff & Kenny-boy Get Theirs
Several of you have urged me to comment on yesterday's verdicts ... so I will. Fact is I knew Jeff Skilling in his early McKinsey days (he once worked for me), and guilty or not—and doubtless guilty—one shudders when a colleague faces the prospect of years and years in the Big House.
Jeff was indeed the "smartest guy in the room" and a micro-manager to boot—which certainly made it clear to me that the idea that he was unaware of details of his subordinates' affairs was utterly absurd. Likewise the idea that he was ignorant of the shades of gray and then black concerning the border between legal and illegal market manipulation insults his intelligence. So I guess I conclude "beyond a shadow of a doubt" that the prosecutors and the jury got it right.
And, alas, I don't particularly wonder why. One starts as a consultant-turned-senior-manager at a modest pipeline company, and a couple of years later one is the Toast of World Business for having created a uniquely important new variety of enterprise; i.e., "smartest guy in the world—ever." (That's an exaggeration, but not too far from the level of Enron hype—after all, it was the 90s.) Moreover, the "guru set" (e.g., Gary Hamel) was at the head of the cheerleader-sycophant parade. (I was mercifully mostly absent—but only because I hadn't gotten around to penning my own "hurrahs.") Hence even the most casual student of human nature can hardly be surprised that no stone, legal or illegal, was left unturned to keep the image of omnipotence alive. In this case that boils down to managing the earnings' stream to Wall Street's liking—and, no matter how smart, coming to believe one's press clippings.
Silicon Valley, my home for 30 years, is a macho place. (Understatement.) (Gross understatement.) Competing with other very smart macho guys for bragging rights is rampant in Santa Clara County CA. In fact, such competition has been rampant wherever boys doused with testosterone have gathered—since we slithered out of the brine. (Sorry, Kansas.) And Enron was a swashbuckling, macho place—for a while the "macho place extraordinaire." Enron, with me applauding, was a band of self-acclaimed "pirates" trashing enterprise stodginess and building a spanking New World Economic Order. I was subsequently appalled at the "screw grandmother" flavor of quotes Enron-ies used as they savagely messed with the California energy market—but not in the least bit surprised. Frankly, that's the way us boys have always talked when nobody was around to hear. (In this case the biz version of the NSA was indeed listening.)
All of which is to say that while the contours of the Enron-Skilling-Lay case are unique, I'm sure it fits neatly into one of the "only seven basic plots" categories.
So, my more or less pal probably goes to jail—doubtless following the best appeals that money can buy. Incidentally "it" has already taken its toll in part. Jeff was a great-looking, buoyant guy—and now it's a pudgy, forlorn visage that emerges on our TV screens. (For what that's worth.)
Some of my closest friends have reddened their hands applauding the string of successful prosecutions at Enron. As I ponder the financial fate of the thousands upon thousands who lost every penny of their pensions, I applaud the verdict, too—though many of those folks did not object at the time to being even bit players at "the coolest place on earth."
I'm glad when the crooks get caught. I even applaud the blunt weapons such as Sarbanes-Oxley which must be occasionally concocted to right the cumulative imbalances of cowboy capitalism run amok. On the other hand I also acknowledge that "cowboy capitalism" is near the heart—and even the soul—of America's 2-century rise to unprecedented global might. (Which I, on balance, consider to be a "very good thing.") Jeff Skilling had nothing on Leland Stanford, for whom my beloved University was named. (Actually it's Leland Stanford JUNIOR University—named after his son.) Mr Stanford was a Member in Excellent Standing of the Robber Barron's Club of America, which stole us blind—and among other things gave us the Transcontinental Railroad. Needless to say, said railroad was one of the Top 5 stimuli to the creation of America's amazing continent-spanning economy that spawned America's amazing global economic enterprise. As I recall (and I shan't Google it), about 10 decades earlier Charles Morris nearly went to the Big House; he was a greedy crook who lined his pockets in grand style—but simultaneously raised a huge share of the money that allowed our forebears to fund the nascent American Revolution. Curb Mr. Morris' "wretched excess"—and we might have sung "Rule Britannia" at the start of the 40th Super Bowl. (Nothing against the Brits mind you—it's that as a Baltimorean* I like our song better.) (*Francis Scott Key, Ft McHenry, etc.)
Without extending this commentary forever, I'd add that Jeff ("smartest guy in the room") Skilling & Kenny-boy were not alone among Renowned CEOs (hint hint) at sailing close to the wind when it came to fixing up earnings on a regular basis in the wild & woolly 90s.
Skilling and Lay had their metaphorical hand in the till. Big time. They got caught. It appears they'll get punished. The system of checks and balances by and large works. And Cowboy Capitalism that underpins the Land of the Free remains a messy business. And thus it shall always be.
God bless America. God bless Cowboy Capitalism. God bless the U.S. Attorney. Life goes on.
(And: Happy Memorial Day. And blessings to the active duty forces and vets and their families everywhere.)