As he made his way into the courtroom on fraud charges yesterday, John Rigas, the former top executive at Adelphia Communications, turned to a reporter and said, “Glad to be getting started.” We could not agree more.
Rigas is just one of many top executives about to stand trial this month after years of slow-moving financial and legal investigations. Expect even more carefully crafted denials this month from Martha Stewart, accused of insider trading; Frank Quattrone, the former Credit Suisse First Boston banker; Scott Sullivan, WorldCom’s former chief financial officer; and finally, Jeffrey Skilling, former Enron chief executive officer.
In an interview with Larry King on CNN, Skilling’s lawyer, Bruce Hiler, insisted that the prosecution of top officials was merely an attempt to find the “good guys and bad guys.” So what if it is? Despite increasingly lateral business models and complicated accounting structures, top executives are still the keystones of any corporate structure. They must be held accountable – even when investigations take years and money trails become labyrinths.
The collapse of Enron, at one time the seventh-largest company in the United States, resulted in the loss of 15,000 jobs and wiped out employees’ life savings worth approximately $1 billion. Not surprisingly, Skilling himself inspired the much-needed federal legislation that now requires CEOs to sign-off on financial statements. In the year before Enron collapsed, Skilling sold more than $60 million of his holdings in the company. Those actions belie his statement on Sunday’s “Larry King Live.” “I thought the stock was a great buy,” he said.
The prosecution of top corporate executives is not just a knee-jerk reaction to the collapsed economy. At this point, even a string of convictions probably will not significantly impact consumer confidence or buoy the economy. Nor will it provide long-term fodder for the battle against spoiled executives – was anyone really following the story of Rigas? Despite Hiler and Skilling’s desperate assertions to the contrary, even people who commit complicated crimes are not exempt from our most simple ethical standards.