Monday, May 29, 2006
Throughout legal history, scandals have come and gone, and there have been white collar prosecutions to match them - just ask Michael Milken.
The recent white collar prosecutions, however, have been different. The types and number of charges have increased, and the penalties have become enormous - often the equivalent of life sentences. It is also apparent that prosecutions have not been limited to the individuals actually committing the heart of the criminality within a company. The government has chosen to go above the individuals who are committing the actual frauds, and in some cases give these CFOs and lower level managers the plea deals, in order to prosecute the CEOs - the managers who oversee the company.
Back when Park, the CEO of a national food chain was held criminally liable for a violation of the Federal Food, Drug, and Cosmetic Act, the fine was $250.00 and there was no prison time. But the criminal conduct, charges, and sentences have come a long way since then.
Was this all necessary to put a halt to individual criminal conduct occurring within corporations? Or could this criminal conduct have been stopped in a better way?
For one, having a better oversight structure in place should assist in putting a stop to criminal conduct. It would also help if the legislators drafted the laws clearer so that everyone knew what was legal and acceptable business conduct and what crossed the line into criminality. We all know what murder is, but how many can actually understand what constitutes mail or wire fraud. Perhaps business schools need to include a professional responsibility class (all ABA law schools are required to have them).
But will the legacy of Enron be that the government over-reacted in an effort to eradicate corporate misconduct. Will the legacy be that it is necessary to stop criminality before it happens, as opposed to reacting after the fact. Would pensions have been saved if there were adequate controls in place to begin with, as opposed to using punishment as the means for achieving compliance. And more importantly, are we so busy prosecuting the past conduct resulting from cases like Skilling/Lay that we are missing what is happening with hedge funds, identity thefts, and new forms of computer criminality?
But for one juror on the Lay/Skilling case, the trial's legacy may be felt everytime a dog appears, as according to Business Week Magazine here, a juror adopted a bichon frisé puppy during the trial, and calls the dog - "Enron."