While the company's top executives made millions selling stock as Enron headed down, thousands of their employees, not knowing what was happening, lost almost everything. The debacle brought a billion-watt media focus on Enron's 'creative accounting' - and also on its massive campaign contributions to both major US political parties and the access this presumably aided.
Arthur Andersen, the accountants, failed to sound the alarm when their client steered into ethical danger zones. They were accused of complicity in Enron's questionable practices, even shredding documents that Congress and the Justice Department would have sought. Thousands of lower-level Andersen employees - most, if not all, innocent - were laid off while the firm struggled for survival as many of its major clients deserted.
'The Enron debacle doesn't mean capitalism is broken,' say Julian E Barnes, Megan Barnett and Christopher H Schmitt in US News and World Report. 'Nor does it fully discredit a devil-take-the-hindmost management style. Still, Enron stands as the signature scandal of the new economy, reinforcing the notion that, for all the progress made since the robber barons of the late 1800s, fair and open markets remain more an ideal than a reality.'
As with many tragedies, some good may result. Enron was almost certainly the catalyst for assured passage of the most sweeping campaign-finance bill in recent US history. In the wake of Enron, neither reluctant members of Congress nor the White House could risk killing legislation that tightens the spigot on corporate contributions.
Enron has provoked leaders of industry to do some soul-searching. At least one, Charles M Denny Jr, of Minneapolis, Minnesota, former CEO of ADC Telecommunications, has gone public. In an article for the Minneapolis Star and Tribune headed, 'Integrity requires eternal vigilance', Denny lays bare the questionable practices of many corporations, their executives and boards. 'I raise my finger to point in righteous indignation at the culprits,' he writes, 'but it bends back upon itself and points directly at me - Mr or Ms Everybusinessperson and Mr or Ms Everycitizen. I have been convinced for years that corporate executive compensation practices are destructive to the integrity of the social contract between management and those they would lead. Yet I only emit an occasional squeak in protest.'
The disaster has also called new attention to the widening pay gap between top executives and their employees. In an interview with CNN, Senator Carl Levin of Michigan, a leading apostle of reform, said that whereas top executives once made 20 times the average pay of their employees the ratio today is 500 times.
'In my role as a citizen, I must hang my head in shame,' wrote Denny in his article. 'The thought of federal or state regulatory agencies being staffed at the direction of those they are to oversee contradicts the very purpose of the regulatory agencies.'
But Denny's most telling point was the urgency for those who see something wrong in business to say or do something about it. He lamented his own 'history of unfulfilled good intentions'.
It is encouraging to see the localizing in Washington, DC, of the annual Caux Business and Industry conferences which aim to raise ethical standards and heighten performance. Periodically young people from business and industry meet to focus on how the ethical foundations of the economy may be strengthened individually and collectively. With speakers and small discussion groups, the emphasis is on making the American economic juggernaut a more just servant of humanity. For all its strengths and grandeur, the US economy leaves millions behind and, as Enron demonstrates so dramatically, occasionally robs those on the lower rungs while showering riches on those at the top.
In his book, Beyond the Bottom Line, which contains examples of exemplary business practice, Michael Smith, Managing Editor of For A Change, says, 'Something further still is needed if industry is to fulfil its role, not just as the great provider of goods, services and jobs but also in building a more just world order.' He calls for 'a moral and spiritual dynamic' which 'touches inner motivation and gives wisdom and insight into people and situations'. The secret we all need to discover is that such a dynamic offers far more rewards in inner fulfilment than could ever be measured in monetary terms.
Robert Webb is a former columnist and editorial writer for the 'Cincinnati Enquirer'. He lives in Alexandria, Va, USA.
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