Sunday, April 16, 2006

Recipe For Disaster - Enron and The Zecharias Moussaoui Cases

It is ironic that the Enron trial is running concurrent with the Zacarias Moussaoui trial. There is a tenuous but real link between the two.

The Enron case is one which we all think we know since its headlines have been in the news for years now. The problem with this sort of "hyper-coverage" is that news stories hardly do the core principles justice.

Like most everyone else, I skimmed the articles thinking "Okay, more white collar criminals filling their own bank accounts on the backs of the working class. Tell me something new." It was not until i watched the documentary "The Smartest Guys in The Room" that I finally put my finger on what is so disturbing about this case. It’s not that people stole; it was how they stole, or rather the “manner in which they stole”. It was “the “presentation”, as a doctor might say when describing some disease. It was the callousness of the stealing that makes it so unnerving to me.
The principles involved in this tale exhibited such a lack of regard for anything human, it made me wince. We usually associate this sort of indifferent behavior with juvenile delinquents and serial killers. That is what makes this trial so different for me.

Jeffrey Skilling and Ken Lay - the "Sultans of Swindle" as I like to refer to them - are resolute in their disclaimers that they did nothing wrong. They are living examples of the modern ethic of free market pirates who live by the creed that if you really, really believe something strong enough, and say it often enough and sincerely enough, then it must be true.

We know that accounting wunderkind and foot soldier, Andy Fastow is guilty. He has already copped a plea to cooking the books for Enron in creative ways that would have probably made him a great painter had he chosen another field of work. The question remains: what did Lay and Skilling know about Fastow's fast moves with bogus profits and untenable accounting practices?

Skilling and Lay were hardly alone here. Practices such as "Mark to Marketing" accounting (an accounting method that books anticipated future profits in the present and is usually associated with stock traders) were signed off on by the SEC. A veritable who's who of financial institutions backed Enron on the flimsiest gossamer evidence that the company was even adding up it's P&L statements correctly. Enron was a Dow Jones wet dream, as the stock market fell over itself throwing money at them and heading toward the bright light. Everyone was lining up to line their pockets it seems.

On a abstract level, blame resides at the feet of a system that predicates wealth on the worst of human instincts. “Gordon Gecko is alive and well” is what we should take away from this. If greed is good, then what these guys did was "Great!" as Tony the Tiger might have bellowed.

0n a legal and practical level, I believe the trial will show that Lay and Skilling paved the way for this sort of unbridled avarice to win the day at Enron. After watching the documentary (and really, everyone should) one thing is certain: there was a climate of approved unethical behavior at Enron that allowed subordinates to short circuit their own sense of what is right.

But the really reprehensible part is what Enron did to the people of California.

Enron was responsible for the deregulation of power companies in California in 1999 causing the now infamous rolling blackouts that left millions of people without power. Traders trading power like it was pork bellies played out this elaborate shell game with California power consumers, ultimately sending $45 billion (that is “billion” with a "B") out of the consumer’s pockets. The climate was such at Enron that these traders would have slit the company's officer's throats if it would book them larger profits.

The indifference displayed by Skilling himself was stark, brutal and palpable. This is why I believe this attitude trickled down from the top. Then there was Skilling's tasteless joke that he made while Californian’s struggled to pay soaring electric bills. He made the joke during a world wide webcast to the Enron employees: (Question: what is the difference between California and the Titanic? Answer: at least the lights were on when the Titanic sank). No, not illegal, but coarse. I guess it’s okay to laugh at the misfortunes of others when it increases our own fortunes.


One trader is heard on tapes obtained by CBS News saying, “Just cut 'em off. They're so f--d. They should just bring back f---g horses and carriages, f---g lamps, f---g kerosene lamps.”

And when describing his reaction when a business owner complained about high energy prices, another trader is heard on tape saying, “I just looked at him. I said, 'Move.' (laughter) The guy was like horrified. I go, 'Look, don't take it the wrong way. Move. It isn't getting fixed anytime soon.”

California's attempt to deregulate energy markets became a disaster for consumers when companies like Enron manipulated the West Coast power market and even shut down plants so they could drive up prices.

“People were talking about market manipulation. People were talking about schemes, people were making jokes,” said U.S. Sen. Maria Cantwell, D-Wash.

“While the president would like to have an energy bill, I'd like to have an energy bill that protects consumers,” said Cantwell.

Consumers like Grandma Millie, mentioned in one exchange recorded between two Enron employees.

Employee 1: “All the money you guys stole from those poor grandmothers in California?

Employee 2: “Yeah, Grandma Millie man.

Employee 1: “Yeah, now she wants her f---g money back for all the power you've charged right up, jammed right up her a-for f---g $250 a megawatt hour.”

It's clear from the tapes that Enron employees knew what they were doing was wrong.

Another taped exchange between different employees regarding a possible newspaper interview goes like this:

Employee 3: “This guy from the Wall Street Journal calls me up a little bit ago…”

Employee 4: “I wouldn't do it, because first of all you'd have to tell 'em a lot of lies because if you told the truth…”

Employee 3: “I'd get in trouble.”

Employee 4: “You'd get in trouble.”

There is something missing here: it is the lack of a sense of right and wrong that makes my skin crawl. It makes me wonder why these trials are not being held at the Hague. I’ve only witnessed this sort of amoral revelation once before in a public display and that was when our current president, George W. Bush, was governor of Texas. But that is another story for another time.

In the case of Zacarias Moussaoui, it’s a bit different. It’s a capital case meaning he could lose his life. Moussaoui is the only one of the 9/11 conspirators not killed who was captured. In essence, an entire nation’s anger could be reconstituted by the prosecution and focused on him for purposes of providing a surrogate.

There is some question as to whether or not Moussaoui was really involved or not with the plot. The defense is trying to portray him as insane, as someone who is a 9/11 terrorist wannabe. The prosecution’s logic is that had he not lied when asked about the plot, they MIGHT have had a chance to thwart the attempt.

By all accounts Moussaoui is not going to be asked to appear on Leno any time soon. One witness describes making eye contact with him during the trial and she describes it like looking into a great emptiness. What Moussaoui has to say is not easy for Americans to hear. It is the same Islamic fundamentalist rhetoric we hear from the U.S. news media now. He speaks of how he wished 9/11 could have continued into 9/12 and 9/13 and 9/14. Killing Americans carries with it no remorse; he is unable even to empathize with the 2000 + families and friends 9/11 has affected. It has the same moral consequence as buying a daily newspaper from a newstand. It is never questioned. In a weird sort of twist, some of those very same institutions that backed Enron had offices in one of the two towers that fell on that cool, crisp September morning in 2001. I just find this unintended nexus between two life-denying cultures very ironic.

The defense of course is telling us that Moussaoui was brain washed; that he was abused as a kid. All of this may be true. It is hard for me to decide that if Moussaoui is executed, it will be because he really did have some part in the planning of 9/11, or if he’s really just pissing people off, opening old wounds and just plain bitch-slapping our national psyche around; a national psyche that has only fairly recently felt like things could ever be simple again.

What stands out in both cases is how two disparate systems have failed the protagonists of these dramas. For Lay and Skilling, a Hannibal Lecter version of capitalism somehow sprang up rooted in greed giving us the Enron tragedy. Enron was simply the hyper-corporation: capitalism taken to it’s ultimate extreme. If followed to its extreme, the very existence of the corporation iteself is up for grabs if it means following the “prime directive” of profits at any cost.

For Moussaoui, a harsh version of Islamic law took hold, rooted in hatred, rooted perhaps in some valid social and political concerns. But the heart has been removed for the sake of simple dogmatic principles. In both these cases, the protagonists have boiled away the things that make all these issues complex and gray - whether it be leading a corporation or fighting for justice, as I am sure Moussaoui believes he is doing.

See, nuanced thinking just does not lend itself well to completing objectives. Jingoistic, macho, single point sloganeering, however, works just great to get others to act out agendas that may not be born from the healthiest of places.
“isms” as john lennon used to call these sorts of things (e.g. capitalism, fundamentalism), have a way of doing that. “Isms” lend themselves to the abnegation of the human spirit in favor of an “automatic pilot” way of living.

We need a call to develop our ethical intelligence, in the same manner that President Kennedy called on the young people of this nation once to consider service as a valid lifestyle. “Ask not what your country can do for you, rather ask what you can do for your country.” That was no less than a challenge to consider living out a different vision of what kind of place the world should be.

Until we validate ethical intelligence as something needing nurturing, the way the 60’s space program validated and encouraged math and science programs in every school in this nation, the only path left for our young is a mindless, soulless consumerism. Like the fast food joints this lifestyle grew up with, this is a poor substitute for human connection. It leaves you unfilled and unsatisfied, ultimately unhappy. It leaves you in positions like Lay and Skilling, like Moussaoui, unable to find the connecting principle between all things.

Until we focus on ethical intelligence in our culture over cognitive or athletic intelligences, the soulless will continue to walk among us. To do anything less is just a recipe for more disaster.

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