It would be nice to think that the convictions of Kenneth Lay and Jeffrey Skilling (in photos) mark the end of an era of corporate corruption. But that’s wishful thinking, Gary Weiss argues in this piece for Salon. Here’s his take on why the Sarbanes-Oxley legislation enacted in 2002 does nothing to get at the root causes of the Enron scam.
“What Sarbox has never done, and never could do, is change corporate behavior, anymore than you can stop a car thief by taping a Do Not Steal sign to the dashboard. Remember that CEOs who are going to pull off a mega-scam like Enron, or even a routine stock swindle or accounting trick, are not going to be deterred by a law book or someone with a stinkin’ badge. They have a more pragmatic view of corporate responsibility — they feel they don’t have any. If you listened closely, you heard the Enron management credo at the trial. It is the same philosophy that has been employed by second-story men and Mafia bosses since the dawn of the first proto-scam. It can be summed up as, ‘If it’s broke, it ain’t broke, and anyway it ain’t my fault.’”
Posted by Melissa Cooley
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12 Comments
Step One: Make SEC 10K reports show the same info as IRS filings.
To quote John Maxwell, “There is no such thing as Corporate Ethics”.
Only with (large) corporations do we allow them to break the law, then listen to them say, “Oh, my, how did this happen? We will make sure it never happens again!” Then a fine is levied that is equal to the profits they make in a few minutes of the day.
Corporate corruption will subside when real accountability is demanded and the government starts using it’s power to break up corporations that abuse their power. I am not holding my breath for it to happen any time soon. Laws with real teeth governing campaign financing will have to be passed first. That won’t happen because those in power that benefit from the status quo would have to be statesmen enough to support any change.
As a side note, I have heard people say that justice was done in the Enron case. But has anyone noticed that of all the cases I remember recently that the CEO/CFO of a corporation was tried and convicted of looting a corporation, only WestStar Energy is still a viable company. (And that because it is a public utility.) All others have been bankrupted by those on trial and their cohorts, taking the assets of many other people down with the company while they skated away with millions.
It seems that their “great crime” is looting the company to the point that the knowledge of their evil doings becomes public and the board of directors cannot cover for them.
Speaking of Westar Energy, it’s former CEO’s, Wittig and Lake (now convicted criminals), contracted an incredible $3.2 billion debt for Westar. Much of this debt will be paid for many years by ordinary rate-payers each time they pay their electric bills. Without this “mortgage” on our Westar electric bills, our electric bills could be much lower. Some of this debt was apparently reduced with proceeds of the sale of the Kansas Gas Service Company, another tremendous mistake.
This whole episode was caused by the failure of Westar’s Board of Directors to standup and say NO to Wittig/Lake during this rampant destruction of the company.
It shows the inability of ordinary stockholders to be able to do anything about malfeasance through regular channels because the vast amount of stock in these large companies is owned by insurance and investment companies.
In the case of Westar, bloggers were protesting the shannigans by Westar’s officers several years ago on Westar’s message boards. Apparently this drum beat finally fell on the ears of justice department people who picked up the ball.
Incidentally, it was well known that Wittig/Lake were using Westar’s jet airplane to take highly placed “guests” on flights to who knows where without reimbursement to stockholders/ratepayers. As far as I know, names of these “guests” have not yet been revealed to the public. So, if anyone knows who they were, please let us know.
Send the bums to a REAL prison instead of a country club. Let them get acquainted with “Bubba” in the shower. Stream live video to boardrooms across the country.
Deterrence works – IF there is real punishment involved.
And some of those incompetent board members were some of the biggest names in Wichita business.
Too bad the Clinton SEC wasn’t on top of this corruption when it was taking place.
We , those who run major corporations, will behave a lot better now that Mr. Bush passed the new tax legislation where we pay no taxes on Interest and dividend income. We at the top can work without an actual wage and recieve stock options and dividends woth millions and pay ZERO tax. All the taxes can be paid by all the white collar geeks and blue collar slobs that anymore are just temps. They have little interest and dividend income – only labor income from payrole. We get it as they get paid so they can’t escape. Most CEOs now make more from interest and dividends in a year, and pay no taxes, than most labor type people will make in a life time. Things will improve with less prosecution now. Life is good!
Hugh Powerhouse
Hehe, well said, Hugh!
Remember, tax cuts for the rich improve the economy . . . even though Reagan and Bush and Bush run ever higher deficits and the economy is not as good as Clinton’s pay as you go is no reason to doubt the right-wing religion–if you just WANT IT TO BE TRUE BADLY ENOUGH, then dammit, it will come to pass.
>>Remember, tax cuts for the rich improve the economy<<
Actually, everyone got a tax cut.
Some of the biggest tax cuts on record, though, belong to JFK. Even a Democrat gets it right once in a while.
Patriot–
Okay, that’s false. BUT let’s assume that it’s true.
Why didn’t it improve the economy?
The Dow Jones has still not hit the high it was under Clinton. Unemployment is falling, but only because it was so high before. It’s still not as low as under Clinton.
National debt is at an historic high. Budget deficit, historical high. Inflation, getting worse. Interest rates, rising.
Sometime taxes can be too high. Before JFK, you had taxes of 90 percent on the top incomes. That’s too high, granted.
But what we have now is gov’t growing 35 percent in 5 years (Clinton shrank spending 8 percent) and tax revenues not even close to keeping pace.
How can any conservative say this is fiscally responsible?
If tax cuts improved the economy, I’d be for them. I’m for what works . . . I’m not for some kind of theoretical purity.
What we’ve seen is under Reagan-Bush-Bush, they’ve grown gov’t and cut taxes thus shooting the national debt to historic highs–it hit a historic high under Reagan, then Bush and now again under Bush two.
How many times does this have to fail before you see it doesn’t work?