OK, they just charged the ex-CEO of ENRON…but Ken Lay is still walking around…and under him, investors were bilked out of billions! Whay is it so hard to charge this bum and his accomplices? Seems to me, every time they sent out a fake Annual Report/Balance sheet, they were committing mail fraud!
So why not just indict Lay and all of the corporate officers, and charge them with 3 jillion counts of mail fraud?
That ought to put them in the slammer for 200-400 years!
Mostly because it’s hard to come up with a smoking gun. Lay will just say “my underlings put out the reports and I didn’t realize they were lying to me.” The state has to prove that he knew what was going on, and it’s highly unlikely there was a clear paper trail.
I think its a little less cut and dry than that. Kenneth Lay is a close political ally of Bush’s. I find it hard to believe they have enough evidence to indict the CEO of a company and nothing on the chairman.
Well they did get the CFO, who would be the one directly in charge of the accounting. He’s in prison for 10 years.
Enron was a huge company which generated, by some estimates, a half ton of paper every day. There are quite literally millions of documents which must be combed through for evidence, and hundreds, if not thousands of people who need to be interviewed and/or deposed. The stakes here are extremely high – Jeffrey Skilling faces 325 years in prison – and there is little room for error and a great need for an indictment to be as thorough and decisive as possible.
When Lay is indicted, and he will be, it will be with thousands of boxes of documents of supporting evidence and the cooperation of Skilling, Andrew Fastow and other executives who can give a more complete picture of Lay’s role in the company’s collapse.
The San Francisco Chronicle has an article on this topic today which describes the process that the Enron Task Force is going through to continue to compile evidence against Lay. Excerpts:
There are miles to go to get Lay, but there are people slowly but surely walking those miles. This is a complex prosecution, and it won’t happen overnight, and the time to haul out conspiracy theories that Lay is getting a pass because of Bush connections would be the point at which no one is investigating his role in Enron’s collapse at all.
It’s not only a matter of the prosecution examing all the files. They will have to find a way to explain it all to a jury. It’s easy to convict someone when the story is, “He hit the lady on her head and took her purse.” Telling this story in a way that a group of slack-jawed Oprah watchers can understand is a whole different matter. You can rest assured that the defense will try and exclude anyone with an above room temperature IQ from the jury. Confuse and conquer - that’s the ticket!
Note that the Feds investigating recent corporate crimes are incredibly overwhelmed. Just the crimes from a couple of the mutual fund scandals would completely overwhelm them. So they pick and chose their fights. E.g., going after Martha Stewart with a vengance but letting the mutual funds get off if they fire a token manager. Never even try to get people their stolen money back.
So it is with Enron. They will not try to find and prosecute everyone. Just a few token people to placate the public. It’s like the robbing of the S&Ls in the 1980s. Hardly anyone was tried, let alone convicted. No serious attempt to recover money. Almost a trillion dollars of our taxes to put money back into the crooks hands.
Also, keep in mind that the Enron folk have immense staffs of lawyers that file zillions of motions of the most ridiculous sort. Every piece of evidence is getting argued about being admissable in court. The reason? Well, your honor, that document would prejudice the jury against my client. (I.e., it’s evidence against him.) That eats into prosecutor and court time that could be better spent actually having trials and throwing people in jail.
What looks cut-and dry from way back here is a lot more difficult close up. Skilling, for example, left few written directives of the policies that are illegal. He and Lay also used automatic stock sales plans, which by SEC rule help insulate the seller against charges of insider trading. I was just reading the linked BusinessWeek article when I saw this thread.
Another problem is that it is not a crime to be incompetent - which is a fallback they can always use. Sometimes business decisions/policies fail despite best intentions. The government will have to prove that whatever action was illegal from the get go and obviously so. And besides, the hundreds of millions of dollars they stole will go to buying the best possible lawyers, who will drag this out in billable hours for all eternity.
As for being a consipiracy to protect a friend of Bush, look at it this way. Assuming that Bush is ruthless and cares only about re-election, what better way to sway the public than prosecuting an old friend and supporter? Were I Bush or Kerry, I would make a point out of screwing my old friends (after cashing their campaign donation checks, of course).
This is standard prosecution tactics when dealing with a complex organization as far as I am aware.
You always work up an organization:
Drug User gives you Drug Dealer gives you Distributor gives you Importer.
Soldier gives you Lieutenant gives you Capo gives you Mafia Head of Family.
Sr. Managers gives you Fastow gives you Skilling gives you Ken Lay.
Take into consideration, as another poster put it, that this is not “Mr. Lay stole my wallet” but a case involving billions of dollars of fraud, perpetrated by very educated people running a corporation that generated millions of pieces of paper per day and you get a very slow prosecution as cases are put together. I am sure that the prosecutors realize that due to the complexity of this case they cannot rush to court to appease the “See, Bush is protecting his buddies” crowd nor the “Give us a political victory as tough on corporate crime” crowd.
This is one subject that I keep feeling the anti-Bush crowd has been just immensley wrong in its criticism. This is not Mr. Mustard, in the library, with the candlestick. Any attempt to make it so is doing a disservice to the justice system.
MeanJoe
I appreciate the complexity of this…but the fact remains…ENRON (and its officers) sent out false and misleading documents (annual reports). THEY SIGNED AND CERTIFIED that these documents were correct and true. Now wefind out that ENRON ,instead of being highly profitable (according to the annual reports) was instead upon the brink of bankruptcy. By signed their names to these reports, and sending them out through the US Mail, they committ ed mail fraud!
What’s so hard to prove?
That’s it exactly, imho. You can call it a conspiracy theory if you like. I call it the Republican agenda once again whoring itself to corporate America.
George W. Bush is in no rush whatsoever to bust a company that’s given him so much over the years, and whose CEO is a close personal friend of himself and his family.
Lay’s Attorney: Why did you put your name on those reports?
Lay: I trusted my underlings, and since the auditors approved them, I had no reason to believe there might be false statements.
Lay’s Attorney (later, to jury): I know this looks bad for Mr. Lay, but he was just trusting the word of the auditors. He’s no accountants, and nothing crossed his desk to contradict their word. Should Mr. Lay have read things more closely. Certainly. But how many of you have signed things without reading every word? The failure of Enron was solely due to the incompetent practices of Arthur Anderson.
And there you have the basis for reasonable doubt.
I detest Bush, but he’s no idiot. He dropped Lay and Sikking like red hot lava when these things burst and he isn’t going to cripple his presidency with a scandal of this nature.
Forgive the drive-by, but I just wanted to salute Smitty for such a brilliant summary of the problem. Hilarious, yet tragically accurate.
I think anyone who believes GWB has a great influence in this has no faith in an impartial judicial system.
With Ashcroft at the helm of the DOJ, it’s pretty tough to keep the faith, baby!
Another factor is the universal truth that “time is money”. In this particular aspect of the saying, as long as you have the money to hire enough lawyers you can draw out a case for a very long time. Simply have your lawyers keep filing for extensions and delays and new motions and the months will fly by. Best case scenario is that the prosecution fades out over time. Or maybe gives up and cuts a deal. Or maybe a close personal friend gives you a presidential pardon before leaving office. Or maybe you die of natural causes.
You know we don’t allow politicking in GQ, and this is politicking at its worst. You have been warned at least once before for an unrelated infraction, cainxinth. You should consider yourself on thin ice.
Several other posts in this thread are borderline at best. I’ll be keeping an eye on the transgressors.
The factual question has been answered about as well as it can be, so I’ll close this thread. This thread seems to be headed in the direction of discussing a Bush-Lay conspiracy, which is better suited to the GD forum.
bibliophage
moderator GQ