I remember feeling such outrage over Enron. I remember seeing news footage of grim-faced employees carrying boxes of their belongings from the corporate headquarters. Those employees – about 20,000 people in total – lost their jobs, along with billions of dollars in stock and retirement savings. I remember feeling such contempt for the architects of that gigantic fraud; feelings that were reawakened when I watched the excellent documentary, “Enron: The Smartest Guys in the Room.”
We learned about Enron nearly ten years ago. A lot has happened since then (much of it worthy of outrage), but it’s interesting to think back to that time and that particular outrage. Enron turned out to be the first in a significant wave of revelations of fraud. There was Bernie Ebbers of WorldCom, a company with inflated stock prices and as many as 55 distinct billing systems. Then there was Dennis Kozlowski, the CEO of Tyco known as “Deal-a-Day Dennis.” Like Enron and WorldCom, the details of Tyco’s $600 million fraud were shocking. But what really seemed to stick in the mind (and the craw) was Kozlowski’s gross and over-the-top extravagance on the company dime. Film footage of the $2.2 million party that Kozlowski threw in Sardinia (complete with an ice sculpture of Michaelangelo that dispensed vodka) was hard to stomach. Apparently, the jurors in his trial agreed; he was sentenced to 8-25 years in prison.
The crimes of Skilling, Ebbers, and Kozlowski (and the attendant front page headlines) happened in a very different atmosphere. An article that appeared in Fortune Magazine a few months ago poked at the question of then and now; David A. Kaplan, who’s working on a new book of great interest to us (”The Age of Avarice”), offered a “contrarian’s take” on crime and punishment. His article, “Why Tyco ex-CEO Kozlowski should get clemency,” laid out a case for clemency for Deal-a-Day-Dennis — or inmate No. 05A4820 as he’s now known.
Kaplan quotes the inmate himself, who acknowledges that he was “piggy” but feels he doesn’t deserve to be behind bars. In the light of the current “sea of financial shenanigans,” Kozlowski looks a bit different. He looks more like a “scapegoat deserving retrospective leniency.” Kozlowski was indeed piggy, but he didn’t bring Tyco down; Kaplan wonders if it’s fair for him to serve more time than that of most killers.
It’s a thought-provoking commentary. Do you think the punishment matches his crime? Bernard L. Madoff got the maximum sentence of 150 years. Fair? What about the execs who brought down AIG or Lehman? What do they deserve?