Pioneer Editorial: Holding the most wealthy accountable
The convictions Thursday of former Enron Corp. executives Kenneth Lay and Jeffrey Skilling will do nothing to return the millions of dollars that stockholders lost because of their actions, but it will help ease the pain somewhat to know that the system works.
Lay and Skilling were convicted by a federal jury of conspiracy and fraud which led to Enron's demise in 2001, toppling at that time the eighth-largest company in the United States, wiping out more than $60 billion in market value, nearly $2.1 billion in pension plans and 5,600 jobs.
Considered one of the biggest business scandals in U.S. history, the trial of the two top Enron executives, which last almost four months and six days of deliberation by the jury, the end result should send a strong message to Corporate America that ethical and fair business practices must be a cornerstone of our capitalist economy. Profit at all costs is not acceptable business practice.
The twin verdicts also serve as an important standard-bearer for the government, as it has embarked on a number of high-profile cases of white-collar crime -- such as convictions against executives from WorldCom Inc. to Adelphia Communications Corp. to even homemaking maven Martha Stewart, who spent time in the Big House.
The message also was not lost on U.S. Sen. Norm Coleman, a former state prosecutor. The Minnesota Republican told state reporters Thursday that the verdicts shows respect of the system. "Those folks had their day in court, the jury spoke. This was a terrible, terrible tragedy to a lot of families and individuals who lost their life savings. In the end, I hope the message is that fraud in the corporate world is not going to be tolerated."
Americans have the right to expect that those who are making millions of dollars, that shareholders and the employees won't have their interests "flushed down the drain by fraudulent behavior," Coleman added.
The fallout from such examples of corporate greed prompted increased regulatory scrutiny over publicly traded companies as well as congressional action in the Sarbanes-Oxley Act of 2002. The latter establishes wide-ranging oversight of corporations, including such provisions as providing a separation between the corporation and accounting firm doing auditing, clarifying the roles of chief executive officers and chief financial officers, providing for disclosures to stockholders of certain actions of the board or executive officers and setting stricter criminal penalties for mail and wire fraud and creating a crime for tampering with a record or impeding with any official proceeding.
The richest and the most powerful must come to understand that they are accountable to the investors and the employees who put them there.