Need, Greed and Corruption:  Lessons of Enron and the Repercussions of Electing an Ideologue Instead of  a Leader and Manager as President

By Bernard Levy

 

 

Loyalty to a petrified opinion never yet broke a chain or freed a human soul.

Mark Twain

 

    These are trying, complicated times.  Our business community continues to exhibit major signs of moral and ethical rot.  Legislation enacted in 2002, the Sarbanes-Oxley Act (S.O.X.), was designed to force public companies, their executives, lawyers and accountants to clean up their acts and perform their professional duties responsibly and ethically.  It’s apparent that S.O.X. hasn’t slowed, yet alone stemmed, the tide of corporate misfeasance and malfeasance. 

 

    The Bush Administration and the GOP-dominated Congress, promoting themselves as ethical and honest government and representing themselves as the breath of fresh air and honesty needed after the Clinton Administration, have done just the opposite.  Greed and corruption run rampant in both the executive and legislative branches, and the real needs of the people continue to go unfulfilled.

 

    All the wonderful, beauteous words of President Bush and his administration honoring God, motherhood, the American flag and apple pie have not been substantiated by actions and deeds.  The man who proclaimed he was dedicated to healing America and bringing its people together has caused greater polarity, dissension and disgust for government than ever before.  He has harmed Americanism and the American way of life in the eyes and hearts of many around the world.

 

We need to restore the full meaning of that old word, duty. 

It’s the other side of rights.

Pearl Buck

 

 

    There is much similarity between the Bush Administration and its leaders and Enron and its now-convicted leaders.  Beside the strong personal, political and business connections between Bush, Vice President Cheney and Enron past CEO and Chairman of the Board Kenneth Lay, Enron’s history has proven its house-of-cards destiny.  The Bush Administration is quickly going in that direction.

 

    Before we go further, let’s define “administration”.  Webster’s New World Dictionary, Third College Edition defines the verb “administrate” as “to manage or direct; administer.”  The definition of “administration” includes “the act of administering; management; specific, the management of government or institutional affairs; and the officials…in the executive branch of government and their policies and principles.”

 

    Let’s touch briefly upon Enron’s business, its past lack of management and its dedication to a morally and ethically corrupt corporate culture.  Kenneth Lay was more interested in seeking government favors and personalized legislation and hob-nobbing with governmental powers than attending to business (assuming that he had the management skills to do so).  Lay was one of those infamous and non-named people with whom Vice President Cheney met when the Bush administration first began.  Although called upon to do so in court and otherwise, Cheney refused to turn over records of that secret meeting dedicated to input and advice from energy field “leaders.”  These “leaders” no doubt influenced the Administration’s energy policies or, rather, the lack thereof. 

 

    Lay subsequently transferred over the Enron CEO position to Jeffrey Skilling, who employed all kinds of “whiz-kids”-bright young men and women with MBAs from highly-prized academic institutions – to expand Enron’s business into exotic hedge, derivative and futures financial products.  As we now know, most of those products and services used pie-in-the-sky algorithms and practices that produced such tempting financial/legal gimmicks as SPEs—special purpose entities.  These off-balance sheet financing contrivances employed brilliant strategies to hide debt, but had little, if any, business purpose, value or common sense.

 

    Enron’s business became much more management-intensive without little, if any, administrative leadership.  Remember, this is a company that “got drunk on the smell of its own corporate cork” by holding itself out as an expert who could accurately predict the future of virtually everything, including broadband and climate.  The jury, trying Lay and Skilling for criminal charges, didn’t believe their attempt to employ a new version of the “Twinkie Defense,” e.g., “Golly, we didn’t know what was going on.  We were only the CEO and Chairman of the Board.  We had no idea that so many people beneath us were dishonest and doing things they should not have done.  Yes, we were hands-on; no, we weren’t hands-on.  We’re very important people, you know, and we can’t be blamed for what we didn’t know or even what we did know (nod, nod, wink, wink).”  The jury didn’t buy their protestations.  Their convictions give great credence to business basics, namely that responsible executives cannot escape reality and run away from the morally and ethically bankrupt, corrupt corporate culture they’ve established.  It’s the culture, the business environment, that caused Enron’s demise.  And, now, for the rest of the story.

 

    The Bush Administration rode into power on a great, white stallion representing purity of mind, body and soul and those great G.O.P. principles:  less government; free trade without governmental regulations or restrictions; and make the rich and powerful richer and more powerful, and they, in turn, behind their gated communities, will take care of the common, working stiffs.  And, if uncontrolled spending and tax reductions, credits and perks benefiting the rich helped to expand a budget deficit, so much the better.  It may be necessary to balance your personal checkbook and maintain a positive balance, but this is government, and checkbooks don’t need to be balanced.

 

    Vastly oversimplified; less government, less taxes and less governmental regulations.  We, the vast public majority, didn’t get the first; received some “crumbs” from the second and have taken a sizeable beating from the third. 

 

    Much before the tragic events of September 11, 2001, the Bush Administration had established the culture, the business environment in which it chose to lead and pursue its policies.  No administration can be blamed for 9/11 events.  (Subsequent independent committees and their reports have strongly indicated serious pre-9/11 governmental and intelligence community communication breakdowns that may have prevented the 9/11 catastrophic events.).  Bush and his people seemingly did most of the right things thereafter.  Afghanistan was a proper move; Osama bin Laden and his ilk, who caused the horrendous human tragedy, had to be stopped.  But, then, a funny thing happened on the way to war; Bush and his people got all caught up in their own arrogance and hubris which men of wisdom and true leadership lack.  They refused to accept honest intelligence and understanding of the world in which people live, and that wonderful white stallion was discovered to be masquerading as a gelding whose colors were black and blue.  Bush and his minions caused intelligence information to be skewed, reasons rationalized and misinformation communicated to the American public.  War was declared on Iraq and the focus to complete our mission in Afghanistan was derailed.  Now approaching its 41st month—our involvement in World War II was only 49 months—our country is on a fast track to third world status.  Let us explain.

 

Freedom is the right to be wrong, not the right to do wrong.

John Diefenbaker

 

    The environment established by President Bush has been based upon unethical and morally bankrupt misinformation and corruption.  The needs of the people, particularly in the areas of education, health and employment have gone unanswered.  The No Child Left Behind Program has been under-funded for years, and at least one state has sued to enforce the Bush Administration’s commitments.  Study after study show that the health coverage of more Americans has deteriorated during Bush’s watch.  Although, our economy appears to be hitting on eight cylinders, we are driving a V12.  True, the economy is producing new jobs, but many are lower-paying positions or those directly connected to our defense efforts.  In addition, many of our major corporations are not only outsourcing jobs, but are actively establishing subsidiaries and divisions in less-developed and developing countries and employing cheaper, experienced and educated labor.  Our “academic and technical clocks” are being cleaned by many superior academic institutions in both India and China.  In fact, the United States just recently hit its cap of 65,000 visas for temporarily skilled (high-tech) workers, and the year is young.

 

    The Bush Administration’s culture has allowed unabated greed to permeate every sector of our society without effective repercussions and restraints.  Contracts were granted to contractors in Katrina’s aftermath clearly in violation of rules and law for which the American taxpayer is paying dearly.  Public companies, including Halliburton, providing services and goods for the Iraq war effort, have over-billed and gouged our government.  Halliburton, once the employer of Vice President Cheney and from whom I believe he still receives remuneration and has future rights to investment opportunities, has been allowed to continue lucrative government contracts in spite of its confession for over-billing, at least, $61 million for products and services.  Halliburton, among other contractors, has somehow avoided government sanctions such as debarment.  That, in itself, smacks of political influence and needs review and correction.

 

    The Bush Administration’s culture has easily lent itself to corruption, misfeasance and malfeasance.  President Bush’s repetitive statement, “Let’s not play the blame game here,” is a cover-up for all including the outing of CIA Agent Plame, in violation of rules and law which placed a CIA operative in imminent danger.  President Bush’s authorization of spying without, at least, adequately briefing appropriate legislators and recognizing basic citizen constitutional rights is just one example of extreme hubris and downright arrogance in the name of national security. 

 

    Culture and environment are important in all institutions.  The cultural climate includes both ethical conduct and management awareness and usually travels from the top downward.  Enron should have known that; they had all those brilliant people running around.  In retrospect, these supposedly intelligent employees were probably running up and down the halls with open scissors in their hands.  The Bush Administration should have known the necessity of effective governmental management; look at all those highly-touted and presidentially-praised people working with and for the Administration.

 

    The defining moment of Bush’s presidency is not what President Bush recently admitted in an interview with German Newspaper, Bild am Sonntag, “I would say the best moment of all was when I caught a 7.5 pound large-mouth bass in my lake.”  He was describing, hopefully with humor, his best moment in office.  However, we offer as the most instructive moment of his presidency his landing May 1, 2003, in a fighter aircraft on the carrier Abraham Lincoln, proclaiming that the war in Iraq had victoriously ended.  More than 2,300 U.S. military deaths and 18,000 wounded later, the war has still not ended.  The reason is quite simple.  If the Administration had established a pre-war culture of intellect, analysis and wisdom, they would have clearly understood the diverse religious and geopolitical differences that existed in Iraq.  Surely someone in the Administration knew or could have googled the lesson learned from the death of Joseph Broz Tito, the past Yugoslavian dictator:  an aftermath of civil war and ethnic cleansing.  Saddam Hussein, a classical despot, held together the Sunnis, Shiites and Kurds under his despotic rule, favoring the Sunnis.  Clearly, the Tito history lesson should have been applied.

 

    The similarities between Enron and the Bush Administration are plentiful.  This country needs a person of wisdom who is both a leader and a manager.  Simply espousing a strong belief system and waving the American flag are not enough.  We require competent, thoughtful and wise leadership and management, someone who can honestly employ the word “Administration” after his (or her) name.