Will Enron verdicts change corporate America?

Kai Ryssdal May 25, 2006

KAI RYSSDAL: Enron was at one point this country’s seventh-largest company. Eight men and four women deliberated for six days. Today they found the two men at the top responsible for its collapse. We’ve been talking to Houston Chronicle reporter Mary Flood throughout the trial. And we go back to her today. Mary, you were in the courtroom this morning. What was it like?

MARY FLOOD: It was very sobering to be in there. It’s never a pleasure to see anyone sentenced. It was very sobering. And it felt, I’ll tell you, it felt momentous. You could hear the sobbing, actually, of the Lay family starting as Mr. Skilling’s guilties were read, and crescendoing as Mr. Lay’s were read.

RYSSDAL: What has the jury been saying so far today?

FLOOD: The jury said that they took this incredibly seriously. It changed their lives. You know, one of them has a new puppy named Enron. And they looked at the evidence. They said they looked at the black and white, the stuff that was on paper, and they said that they found it implausible that so many cooperating witnesses could have woven a story that was so alike. They basically believed the government cooperators.

RYSSDAL: This is a story that has shaped corporate America for the past four or five years.

FLOOD: Yeah, it’s a huge tragedy personally and a huge lesson for America, and for corporate America, certainly. I’m sure there’ll be plenty of sober people in corporate America just as there were in the courtroom.

RYSSDAL: Interestingly, though, a lot of the impact of Enron has already happened. I mean, we’ve had Sarbanes-Oxley since the company went into bankruptcy. Companies are, arguably, treading more carefully, I guess one could say. What happens now?

FLOOD: What happens now in America, in corporate America? We forget the lesson after a few years and are shocked back into reality in about 20 years.

RYSSDAL: Maybe not even that. I mean, you know, there are options trading investigations going on on Wall Street. Do you really think that corporate America has taken anything away from this?

FLOOD: Hopefully, they have. But there’s an ebb and flow to this. And the savings and loan scandal were, you know, 20 years ago. Here in Houston they were all over the place, and everybody thought that would clean up business. We tend to forget this kind of lesson after a couple decades.

RYSSDAL: There are two impacts this is going to have in corporate America. One is on the structure of corporate governance, but the other may be more specifically on how executives handle themselves.

FLOOD: Yeah, and how people think of executives. We heard from the jurors, and they talked about respecting these guys. When they saw Lay and Skilling on the stand . . . they said they liked them. They respected them. And then they thought that they were just lying.

RYSSDAL: Getting back to the practicality here, Mary, there is going to be an appeal.

FLOOD: Of course, there is going to be an appeal. And there are a lot of places where they could appeal. Some of them would include the change of venue, that we’ve stayed in Houston. Another would include all the evidence about Mr. Skilling’s former girlfriend’s business, that he and Mr. Lay invested in. The government didn’t say that they were going to bring that up. And there are several more, including the deliberate ignorance or willful blindness jury instruction, though it didn’t sound like that was particularly potent for the jury.

RYSSDAL: You have, I’m sure, in the course of your reporting on this story for the past three or four months, talked to former Enron employees. What do you think they are thinking today?

FLOOD: I think some of them are gleeful and some of them are horribly sad, and some of them are both. A lot of people really liked, especially, Mr. Lay. And a lot of people loved working at Enron. And I think this is just bittersweet for most of those people.

RYSSDAL: Mary Flood with the Houston Chronicle. Thanks, Mary.

FLOOD: My pleasure, Kai.

RYSSDAL: We made some calls today to some of those former Enron employees Mary was talking about. Trying to get our own sense of them. We reached Eric Eden in Houston. He spent 10 years at the company. Says he kind of knew this might be coming.

ERIC EDEN: I was a defender of Enron and Ken Lay. We used to sit around for a long time and talk about whether or not it was a house of cards, long before Enron went away. I was of the group that would have said, “I believe in these guys and it is real. Come to find out I was defending the wrong side of that fence.

RYSSDAL: Sentencing for Skilling and Lay is set for Sept. 11th. Lay faces a maximum of 45 years in federal penitentiary. Skilling could get 185.

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