Friday, March 10, 2006

Andy Fastow Takes the Stand in the Enron Trial

I'm back from my weeklong immersion in the parallel universe of the Internet startup. While I've been busy trying to create a business where none existed, the Enron trial has returned to the front page with testimony from former CFO and con man Andrew Fastow.
Defense attorneys for Ken Lay and Jeff Skilling have stuck to their story that the only thing wrong with Enron was Andy Fastow. While the defense attorneys have tried to get other Enron execs to admit that they didn't actually commit any crimes, they have been more than happy to put the spotlight on Fastow's thievery. As Houston Chronicle columnist Loren Steffy points out, this may not work for the defendants:
When [Fastow] proposed partnerships to inflate the company's earnings and hide debt from investors, he was praised. When he proposed a system that would pay him millions on top of his Enron compensation to run them, senior management and the board not only approved, but directors happily waived the company's ethics policy.
It didn't matter because Enron needed him. Management needed the juice that only he could gin up; it needed the shot to its earnings. Enron's finances had deteriorated to the point where only a crook could save them.
The crook on the witness stand was, as he said, a hero to Enron. He may have been a greedy liar, but he was Enron's greedy liar, a wunderkind of deception and manipulation.
I'm reminded of one of those bank caper movies in which the leaders of the gang discover that one of their henchmen has been stealing from them. Yes Fastow was a particularly brazen criminal, but he fit the Enron culture, in which clever dealmaking and accounting skullduggery were valued more highly than operational execution and actual cash flow.


Blogger jason said...

So they are guilty of building a greedy dishonest corporate culture. But does that make Lay and Skilling guilty of the crimes that flowed from the culture.

I hope so. Although in Bush's America where privates and corporals are the only people punished for decisions made at the very top - I doubt it.

11:39 AM, March 11, 2006  

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