I think one can view the Enron verdict as a referendum on the laissez faire way in which CEOs practice business. On the one hand, it seems clear that the Enron jurors found it unbelievable that two smart and “hands on” people such as Lay and Skilling could be unaware of the affairs within their own corporation. In this sense, the prosecution did its job and the verdict is simply a statement about the Enron executives and their credibility.
On the other hand, it also seems that jurors did not appreciate any claims that Lay and Skilling were unaware of issues that arose within the company they were charged to run. Indeed, jurors spoke a lot about responsibility, and the fact that ultimately Lay and Skilling had to be held responsible for the actions of the people within their command. In so doing, jurors analogized their own lives and employment situations to those of Lay and Skilling. Hence, one juror said that all of the jurors with jobs had to juggle their jury duty with their regular responsibilities, and could not shirk any of them. Most notably, the juror who was an elementary school principal said that parents hold him responsible for the welfare of the students in his school, and hence it is insufficient for him to claim that he does not know about things that occur in the classroom. By this token, he did not appear to appreciate Lay and Skilling seeking to shirk their responsibility by claiming they did not know about things that occurred in their company, or otherwise seeking to lay the blame on someone else’s doorstep. These kinds of statements make me less comfortable with the verdict. Their message is that executives should be held responsible for knowing about events in their company—particularly those with catastrophic consequences. Thus, as one juror said, “it’s not right” to claim a lack of knowledge about company affairs.
At first glance this policy of accountability seems appropriate and even intuitive. Who else should be held accountable for the failures of the public company but those in charge of running it? Then too, this policy resonates with the public who, like the jurors, appear to believe that the “buck must stop” with those at the top. Finally, I think there is a strong argument to be made that the state system of accountability is defective, and hence we may need some other mechanism to achieve our accountability goals. However, the policy of accountability, while easy to pronounce, seems difficult to implement in the context of a large publicly held company. The policy also seems to run counter to the policies within corporate law that allow corporate officers and directors the flexibility not only to rely on others when carrying out their duties, but to make even grossly negligent mistakes. It also seems that the policy cannot be implemented the same manner in every context. Indeed, should we view the accountability of executives through the same lens as the accountability we expect from a school principal? Finally, the policy seems particularly problematic when we use the criminal justice system as a vehicle for framing it. From this perspective, to the extent that the verdict reflected the juror’s (and society’s) blanket desire for executives to assume more responsibility, and have more accountability, for the companies they run, I am uncomfortable with them expressing that discontent in the form of a criminal verdict.
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1. Posted by Paul on June 1, 2006 @ 14:36 | Permalink
I don't think the jurors were making a direct link from a lack of detailed knowledge of everything that was happening at Enron to criminal behavior and a guilty verdict. Rather they were appropriately rejecting the defense characterizing the criminal behavior as a lack of knowledge. I guess it depends on how you read their (jurors)post trial quotes but I didn't read it the same as your post suggests.
2. Posted by Nancy Rapoport on June 1, 2006 @ 17:15 | Permalink
Man, this is fun, reading everyone's blogs! The main thing that troubled me about some of the jury's comments is that it seemed the jury was applying more of a civil trial rubric (knew or should have known) to a criminal trial, where intent really does matter. Skilling and Lay are probably going to appeal the jury instruction about willful ignorance, which intersects (best as I can tell) the criminal and civil realms. I -think- that the prosecution was making the argument that the jury could INFER intent from the willful ignorance instruction, but I wonder if that's what the jury did. BTW, shouldn't we rename that instruction the "I have my fingers in my ears and can't hear you--la la la" instruction?
3. Posted by Gordon Smith on June 1, 2006 @ 22:13 | Permalink
Nice post, Lisa. That last line is great, Nancy.
Re accountability: isn't the issue whether executives should be accountable in this way? That is, through criminal law? Based on Lisa's concluding sentence, I assume she is wondering the same thing.
4. Posted by ellen s podgor on June 1, 2006 @ 22:24 | Permalink
I agree with so much said here. Lisa I think the jury has sent a message to CEO's that accountability is now the norm. And although it was said in the past in the Park case, it now has been ratcheted up by the enormous consequences faced by the CEO who does not know or fails to change improprieties within the company. The enormous charging of new and expansive crimes and the severe penalties makes this a whole new game (although by no means a game). I think we need to shift from accountability to transparency. And the transparency is in fact provided by the new auditing measures that have been added to the regulations overseeing companies.
And to Nancy - I also agree. I also think the government erred when it argued for the wilful blindness instruction. It most definitely lowers the level of intent required for a guilty verdict, even in a case that is presented by the prosecution as more of one of a man who lied, as opposed to a man who stuck his head in the sand as if an ostrich. With the enormous penalties faced by Skilling and Lay here, I have to wonder if the highest of levels of intent will be required and should be required. Is this the same kind of culpability that one would find in a person who purposely and knowingly points a gun at someone and kills them? I think not. Unlike many commentators out there, I do think that Lay and Skilling have an argument on this issue for their appeal.
5. Posted by Lisa Fairfax on June 2, 2006 @ 6:14 | Permalink
I think as Ellen points out, there is a message here and elsewhere about the importance of accountability. I think it may be presently a norm, but I am not sure if it is episodic or if it will actually continue.
I think as all the post suggests, there is this fine line between the jury's verdict--as Paul points out, does it reveal that jurors made an inference about Lay and Skilling's intent (i.e., based on the evidence, they HAD to know about wrongdoing), or as Ellen and Nancy suggest, does it reveal that the jurors applied some lower standard because the jurors made an assessment about the kind of business practices in which they would have liked the CEOs to engage. I am hopeful that it is the former, but concerned that it might be the latter.
In either case, I am definitely going to teach my students about Nancy's new jury instruction.
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