Five years after corruption led to two of the biggest corporate bankruptcies in US history, two former leaders of the Enron energy trading company this week were found guilty of fraud and face life imprisonment. The convictions of Key Lay and Jeffrey Skilling are a capstone to an era of excess and lying that tarnished the image of US business.
When Enron collapsed in bankruptcy in 2001 thousands of workers lost their jobs. Thousands of employees lost their pensions. Shareholders saw their investments shrink to zero.
During their trial in Houston,Texas, Enron's former top executives, Ken Lay and Jeffrey Skilling, blamed others for the collapse of the company. It was others, they argued, who lied about the company's finances to boost the share price. The 12 jurors disagreed and found Lay and Skilling guilty of securities fraud and lying to auditors.
Mort Zuckerman, a New York property developer and publisher of US News and World Report Magazine, applauds the decision of the Houston jury.
"These were the people involved in this type of greedy transactions and fraudulent transactions to make their own companies look better than they were and we should catch them," he said.
Other corporate leaders have been punished for corruption. Bernard Ebbers in 2005 was found guilty of 11 billion dollars of securities fraud that led to the collapse of World Com, a huge telecommunications firm. He has been sentenced to 25 years in prison. Dennis Kozlowski was found guilty of stealing 150 million dollars from Tyco, the company he headed. He has been sentenced to up to 25 years in prison.
The US Congress has sought to make it harder for companies to lie about their finances. The Sarbanes-Oxley statute passed in 2002 requires chief executives to be personally responsible for their companies financial statements. Republican Congressman Michael Oxley tells Bloomberg News that the law is helping to combat corporate corruption.
"Our statute was really based on two things: transparency and accountability," he said. "And the more that information is out there in the public, I think it would be very difficult to pull off the kind of fraud that the Enron officials did."
Senator Paul Sarbanes, a Maryland Democrat, the other author of the statute, says corporate behavior has improved. But he still worries about the reputation of U.S. financial markets.
"I think the standards have risen very considerably in the corporate world," said Mr. Sarbanes. "People understand the importance of having honest figures. If you have honest figures, investors are going to put their money in American capital markets. If investors don't put their money in American capital markets, our economy is going to be dealt a real body blow."
Critics say Sarbanes-Oxley law is excessive, requiring too much paper work from U.S. registered companies.
Experts say the message of the Lay, Skilling, Kozlowski and Ebbers convictions is that financial corruption-when discovered-will not be tolerated and that wrong doers will go to jail.
