June 01, 2006
Enron Jurors' Demand for Accountability
Posted by Lisa Fairfax

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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