Tuesday, October 24, 2006

No Period at the End of the Skilling Sentence

Like many people who've been observing the Enron follies without having any personal involvement - we're not employees, shareholders, Houstonians, et al. - I am of two minds on whether "justice is served" by giving Jeff Skilling a sentence of 24-30 years. One of those minds tells me that a hefty white collar sentence will provide a good cautionary example for others considering corporate mal-sleeze-ance. The other mind tells me that a shorter sentence and seizure of whatever assets JS accumulated while swanning around Enron will serve justice just fine, and the slapping Skilling behind bars for much longer doesn't make me any safer walking the streets.

But I wasn't impacted by Enron - not directly, anyway - and I'm sure that for a lot of those who were, Skilling's going to jail doesn't really put a period at the end of the Enron sentence. (His getting tumbreled to the guillotine wouldn't be enough for some.) In today's Houston Chronicle, a few of them weighed in:
"We've got a long way to go," said Charles Prestwood, a former pipeline operator for Enron who lost $1.3 million in retirement savings. "We will try to get some money back and it can take awhile." ...

Prestwood would rather have seen Skilling receive a longer sentence, but he said he was looking forward to seeing some of the restitution.

U.S. District Judge Sim Lake on Monday approved an agreement between the government and Skilling's attorneys that requires him to turn over about $45 million to victims of the collapse. "His crimes have imposed on hundreds, if not thousands, a life sentence of poverty," Lake said of Skilling.

OK. Charles Prestwood has a right to be angry. But did he really "lose" $1.3 million in retirement savings? Yes, I'm sure that's what his portfolio, no doubt chocked full of pumped up Enron stock, was worth on paper at some point. I have no idea what a pipeline operator makes, but say Mr. Prestwood contributed $5K of his own each year for 20 years, and Enron fully matched it... Well, I'm too lazy to run the numbers, but I'm guessing a realistic, reasonable value for a normal portfolio under this scenario would be a lot less than $1.3 million. No, what Mr. Prestwod lost was no doubt some of the actual money that he'd earned. But he also lost his hopes and dreams. Maybe he planned on retiring at 50. Maybe he was going to buy a cabin cruiser. Maybe he was going to send his kids to college without having to take out big loans. But it's unlikely that he actually got swindled out of $1.3 million.

And "life of poverty"? Wow. No doubt there were some elderly employees who will never recoup their real losses, but I'd like to see the data on how many are now sentenced to a "life of poverty."

Loyal to the end, Skilling's assistant spoke up for her ex-boss.

"It is my opinion that Jeff Skilling has been persecuted for five years. Mr. Skilling was and still is recognized as a visionary. To lock Jeff Skilling behind bars for the rest of his life would be a greater injustice to this country," Sera told the judge during the ictims' statement portion of the hearing. She, too, had lost thousands in Enron stock, but blamed her own investment decisions for the losses.

Well, the great visionary 'Jeff Skilling has been persecuted' is a bit over my top - talk about standing by your man - but I like the fact that Sera is taking some ownership for her own actions contributing to her portfolio losses. I'm sure there was much in the corporate, Texas sky's the limit culture at Enron that encouraged people to invest in, and stay in, Enron stock. But if something sounds too good to be true, guess what? It probably is. People let themselves get sucked into the Texas pie-in-the-sky that everyone was going to get to be rich.

Who wants to be a millionaire, indeed.

As for Skilling and his partners in crime, the larger question remains, how did these guys get caught up in this? Skilling's a smart, educated guy. Harvard MBA, I believe. And while the MIT MBA in me says, that figures, the point is that here was a guy who knew something about accounting and finance.

Were these guys all "concious criminals"?

I think not.

But they are people who somewhere along the line lost the ability to really examine their actions, motivations, and consciences. They must have all convinced themselves that, by definition, if they were doing something, it just couldn't be wrong. No true north in their moral compasses. Just the quavering arrow of bogus moral syllogism at work.

I'm doing this. I'm a good guy. Therefore, what I'm doing is good.

Even now, it looks like Jeff Skilling can't own up to the fact that he could actually have done something wrong.

There's still no period at the end of the Enron sentence

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