As we learned from last year's Washington Group-Raytheon fiasco, accounting is an interpretive art, professional ethics are pliable and things aren't always as they seem. Bankruptcies are messy affairs where behind-the-scenes haggling and hardball practices produce plenty of winners and losers.
The Enron scandal is a much bigger mess than either of Washington Group's bankruptcies or the IT Group's recent request for protection from its creditors. The Enron bankruptcy undermines confidence in our institutions at a time of war and economic peril, liquidates the retirement nest eggs of many former employees and knocks a hole in power development plans.
Enron also has stranded significant and respectable powerplant contractor and specialty contracting businesses that believed they were, when acquired in recent years, nestled safely in the arms of one of the stars of Corporate America. Enron's multifaceted entrepreneurial zeal looked like the future of American business. Instead, Enron will forever be an emblem for accounting gymnastics and corporate greed.
Enron's array of operations was so big and unwieldy that it defied conventional interpretation. Now we know that what many believed to be genius was a cover for greed. Alexis de Tocqueville said that self-interest, rightly understood, is a good thing. It means that one's own prosperity and well-being is linked to other people doing well, too. Enron's management and board failed to understand the concept of self-interest the way de Tocqueville applied it and the way Americans believe business should behave. Now the innocent are paying for it.
Enron Failed to Appreciate Its Own Best Interests 1/28/2002
January 28, 2002