Dasvidania Kenny-Boy

Thursday, May 25, 2006

Today, the thousands of people who lost billions in earnings, retirement savings and investments when Enron imploded under it’s own fiscal mismanagement, saw some justice with the guilty verdict over former executives Ken Lay and Jeff Skilling.

The eight women, four men jury had deliberated for six days before rendering their verdict shortly after 11 am Houston time. The trial had lasted over six weeks as the US Justice Department laid out a case detailing how the company once named “America’s Most Innovated” for six consecutive years by Fortune magazine, collapsed under systemic corruption and falsified financial reports.

Skilling took the brunt of the charges as Enron’s president. He was found guilty on one count of conspiracy, five counts of giving false statements to auditors, 12 counts of securities fraud and one count of insider trading. Skilling was found not guilty on nine other counts of insider trading.

Lay got off somewhat lighter. He was found guilty on one count of conspiracy, three counts each on securities fraud and making false statements to banks, two counts of wire fraud and one count of bank fraud, a charge that was tried separately before the judge, sans jury.

Although Skilling and Lay have yet to be formally sentenced, chances are that both men will spend the rest of their lives in federal prison. The conspiracy and fraud charges carry a maximum of five to ten years for every count; Skilling’s insider trading charge carries a maximum of ten years. If sentenced to the absolute maximum Skilling could do almost 200 years in prison and Lay around 120.

While it’s not expected that they’ll get the maximum, it is expected that the judge will see that they serve their sentences consecutively (one after the other) rather than concurrently (all at the same time).

With today’s conviction of Enron’s top executives, a dark chapter in the annals of American business is closed. When Enron collapsed in 2001, it started a proverbial tidal wave of corruption revelations amongst some of the biggest businesses that emerged out of the economic boom of the 90s. Executives of Tyco, Adelphia and Worldcom have already been found guilt of book cooking and fraud; biggest of all being Worldcom CEO Bernie Ebbers, who oversaw an $11 billion US accounting scandal that got him 25 years in prison.

Enron started as two natural gas pipeline companies out of Texas. Under Lay’s watch, Enron became the seventh biggest corporation in America, its holdings extending to energy production, electricity and communications; Enron even bought the home of baseball’s Houston Astros and renamed their park Enron Field. Ken Lay also maintained close ties to George W. Bush, contributing heavily to then Texas Governor Bush’s first presidential campaign.

In 2004, Enron emerged from Chapter 11 bankruptcy, its assets split amongst three different owners. Once employing 21,000, now only 9,500 people work for the former energy giant

Written with reporting from the New York Times, Fortune magazine and CNN.

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