Baseball Crank
Covering the Front and Back Pages of the Newspaper
July 6, 2006
BUSINESS/LAW: Deserve's Got Nothin' To Do With It

I don't blog much about business-scandal stories like Enron, not least because of the potential fof conflicts with work, but I would offer a few reflections following the death of Ken Lay.

First, I always wondered - if Lay had not been a major financial supporter of George W. Bush, would Enron have been a story for the Wall Street Journal and the financial pages, rather than front page news? Quite possibly. There have been many sensational business scandals that never really got more than passing attention from the non-financial press. Certainly, had it not been for the desperation to tie Lay to Bush, you would not have seen people like Paul Krugman arguing that Enron was a bigger story than September 11.

Second, would Lay have been indicted if he hadn't been so politically prominent? Maybe not. The public outcry had Lay not been indicted would have been fierce, precisely because of his association with Bush - but absent his unique prominence resulting from his political ties, the public would much more likely have been satisfied with the indictment of Andrew Fastow (the CFO who was the real locus of misconduct at Enron) and the hands-on CEO Jeff Skilling, and less concerned with nailing a genial but apparently detached Chairman of the Board.

I can't really criticize the jury for convicting Lay - they heard a whole lot more evidence than I ever did, and maybe the devil in the details made Lay's innocence implausible. But everything I saw about the case suggested a front man who was just out of touch with the details of Fastow's schemes and the fundamental rot in so many parts of the company's business. (Notably, some press accounts have indicated that even when Lay started selling off his stock to meet margin calls, he went out of his way to try to hold on to as big an Enron position as he could manage, at the expense of selling other investments - evidence of a guy who deludedly believed in his own company to the bitter end). That doesn't mean he should ever have held a position of any responsibility, but it also doesn't mean he was a crook so much as a fool.

If that's what really happened - if Lay simply failed to understand or examine the financial house of cards that Enron had become - then he didn't deserve to be branded a criminal - but then, he didn't deserve the wealth and influence that came with being the Chairman of the Board of a massively-capitalized public company, either, so there's a certain rough justice in how Lay's negligence came crashing down on him in ways that I suspect he never imagined were possible. Fortune's Wheel, and all. Which is a tragedy of sorts, but just one of thousands of tragedies in the Enron saga, most of them involving people who had a lot fewer chances to avoid their fate than Ken Lay did.

Posted by Baseball Crank at 8:50 AM | Business • | Law 2006-08 | Comments (6) | TrackBack (0)
Comments

Crank-

I think I'm pretty much with you on Lay. I don't really know or really care. I'm certain from all I heard that he's a bad guy who deserved his conviction. But this notion that he's the second coming of Hitler/Mao/Stalin seems a tad extreme.

Incidentally, that's not what I find curious. I'm fascinated by the way the NY Post -- usually very pro-Bush & pro-Bush Friends, Inc. -- always piles on Lay. Even now that he's dead.

I posted this morning on the Post headline, which takes quite a bit of glee in Kenny Boy's passing, it seems to me:

http://mikesneighborhood.blogspot.com/2006/07/layd-to-rest.html

Posted by: Mike at July 6, 2006 9:25 AM

Lay was guilty in the same way that MArtha Stewart was, by not being exactly forthcoming while not under oath. Which bothers me. Skilling and Fastow deserves centuries in prison. They engineered a massive fraud, and they knew it. I bet that Lay, to his dying day, really couldn't figure out what he did wrong. I think he was guilty of somethign like depraved indifference. He didn't know or care if something was drastically wrong, and didn't understand that heading a global spanning company like Enron did entail a certain moral and ethical responsiblity. So his indifference, coupled with his lack of ethics, led to the real bad guys stealing away the company, and many people's savings.

He wasn't a true bad guy, just an callously uncaring one. Anyway, he is dead, so now the lawyers will make even more on everything.

Posted by: Daryl Rosenblatt at July 6, 2006 9:43 AM

While I agree with the positions asserted here on Lay to say that:
..."there's a certain rough justice in how Lay's negligence came crashing down on him in ways that I suspect he never imagined were possible. Fortune's Wheel, and all. Which is a tragedy of sorts..."

I don't buy. Ken Lay is no tragic figure. What he presided over, failed to see and did nothing to mitigate was a tragedy. People lost jobs, retirements and huge amounts of money because of his unrepentent greed. Lay's "tragedy" pales in comparison by factors of thousands compared to pretty much every other tragic tale that came out of the Enron debacle. I wish he had lived a long healthy life in a high-security prison full of California residents who had been overcharged for electricity.

Posted by: jim at July 6, 2006 12:14 PM

Good point all. Though Crank is a bit more kind than I would be. I'm much more in Jim's camp.

The BEST thing you can say for Lay is that he was outrageously compensated and rewarded for being an unwitting participant of a huge scam that ruined thousands of lives?

There is tragedy all over the Enron story, but none of it reaches up to Aspen where that fat cat died younger than expected in the comfort of one of his mansions.

Posted by: Mr Furious at July 6, 2006 1:40 PM

If he's even dead, right?

Posted by: Mike at July 6, 2006 2:00 PM

It seems to me that Bernie Ebbers and Dennis Kozlowski logged quite a bit of front page time, despite their lack of Bush cronyism. There's an understandable desire to make political hay out of the fact that Lay was a prominent Bush backer, but I don't think that's ever been what drove the story. Last I looked, the New York Post wasn't known for it's anti-Bush vendettas, for example.

Posted by: Jerry at July 6, 2006 2:08 PM
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