Was Ken Lay Treated Fairly?
Posted: Saturday, July 08, 2006
by Joseph Collins
Publisher / Columnist for Double Impact magazine
In the aftermath of a criminal trial and the unexpected death of Enron founder and former CEO Kenneth Lay, the question arises: Was Ken Lay treated fairly? Science fiction writer Lois McMaster Bujold stated, “The dead cannot cry out for justice, it is a duty of the living to do so for them." As members of “the living", a
Running the 7th largest company in
One only has to look at the number of lives forever changed as a result of a major corporate failure like Enron. Internal jobs and careers were lost. Employee retirement accounts built up over decades have been destroyed. Major shareholders like the California Public Employees’ Retirement System also got rocked to the core. Nearly every law, accounting and financial firm associated with Enron paid dearly in terms of penalties, fines and a loss of reputation. Thousands of companies doing business in Enron’s “vendor ecosystem" suddenly had hundreds of millions of dollars of invoices and debt stranded in bankruptcy court. Many smaller Houston-based companies were “one-customer companies" and were forced to quickly find other revenue sources or shut down entirely.
No one can possibly gauge the toll on the personal lives of people associated with Enron. How many wrecked marriages are out there? Lost relationships? How many retired employees receiving well-deserved monthly benefits were violently thrown back into the workforce or worse, doomed to poverty or the indignity of a much lower status of living in their golden years? How many suicides occurred as a result of people who could not face the excruciating consequences of someone else’s greed, avarice or horribly bad judgment? Even one is too many.
As Enron’s founding father and CEO, Ken Lay was lavishly compensated to the tune of $22,000,000 annually, plus stock and benefits. If his wide array of responsibilities could be summed up in one statement, it would be this: Maintain the value owed to all stakeholders in the company. Ken Lay not only had a fiduciary responsibility to all of the financial shareholders he had a responsibility to all stakeholders. To that end, he failed miserably.
Did the courts of law and public opinion treat Ken Lay fairly? The law stipulates that Ken Lay “knew or should have known" that massive accounting fraud in the form of “off-the-books" transactions were occurring in order to artificially inflate the stock price. He either knew or should have known that these kinds of activities would endanger the health of the company he worked so hard to build. Ken Lay either knew or should have known that as the elder executive, board member and mentor to everyone at Enron – he possessed the power and force of personality to publicly admit that Wall Street targets would be missed, to demand honesty in reporting and to correct any wayward behavior on the part of other executives and senior managers. He didn’t do his job and he got what he deserved.
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More commentsThis is an well write article. I am looking forward to seeing more of Mr. Collins articles. James NewtonJames, thanks for commenting!
I am impressed with the breakdown of information detailed in this article. Because, ultimately, Ken Lay did not do his job. Very well written! Jynell Scott Holliday, Missouri City, TexasJynell, thanks for commenting! (Note: Jynell and I were both employees at Enron, so she and I both experienced the failure of Enron personally. She remains a good friend and a respected colleague.)
Your article reflects the initial reactionary view. Have you ever considered Ken Lay may have been saved by an act of God, to compensate for an injustice. The following is from a Reuters article regarding Ken Lay: Under precedents set by the Fifth Circuit Court of Appeals in New Orleans, a defendant is not technically ruled guilty until the person has been sentenced and has exhausted the appeals process, lawyers said.I have to disagree with your premise that my view is reactionary. The Enron debacle has been unfolding since 1999, has shaken the confidence of an entire generation of investors and has unleased incalculable destruction in the lives of former employees. Moreso, I took great care to lay out a case which simply says that in one of the most closely watched criminal prosecutions of our generation, this defendant was treated fairly by a jury of his peers. The law worked the way it was supposed to.
Corporate accountability by a CEO is not only a fiduciary duty, but an ethical responsibility as well. To profess ignorance of this type of corruption within his company has no credibility. You don't receive a $22 million dollar salary by being your average bloke who makes mistakes and doesn't know what's going on around you.Renee, thanks for commenting!
There is nothing reactionary about asking a man to do his job, or being upset that thousands of lives were destroyed because a man failed to do what he was highly paid to do. Frankly, I could have run Enron into the ground just as effectively for a lot less than what Ken Lay was paid!Daniel, I love your honesty and humor! Thanks for commenting!
It seems Lay built the company from scratch. So he must have given lots of opportunities for people. How harsh we are when it goes the other way, particularly when failure happens to someone else. Of course if he committed crimes, he should be punished. It seems he also did some good.Lou, you are certainly right - Ken Lay did build a great company that fed alot of families and developed alot of corporate professionals and entrepreneurs. However, he cultivated a sense of trust to a point that earned him near-cult status in the business world. He then violated that trust. Alot of people were hurt in ways the general public will never know about.
Ken did his job to the best of his ability, somehow in the end he failed, everyone makes mistakes and some of us learn from them some of us repeats the same mistakes. Do not look at his salary and think that he was overpaid, do we ever say that a football player is overpaid? no!!Instead we think of them as idols. , all of his sins have been forgiven. Now it is time to let him go in peace.Rose, thanks for commenting!
I thoroughly enjoyed reading both of your articles and anticipate reading more from you. I admire your abilities as a writer. I have been enlightened and educated.Avis, thanks for your comments!
So, the next question could be, " Is Ken Lay really dead?" What do you think of that?Kimberly, I'm not big on conspiracy theories, so I would give him and his family the benefit of the doubt. In fact, the stress of the last year at Enron (2001) and the last five years being prosecuted would put incredible stress on anyone. Let's just hope that senior executives everywhere take a stand for integrity. Jessie Jackson coined the phrase, "economic violence". He correctly put that concept into perspective alongside street violence, terrorism and drug dealing. It's all the same.
Point taken. No need to respond again.
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