David R. Henderson  

Anderson on Enron

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One of the views I had accepted uncritically is that all of the people at Enron charged with crimes really were guilty. But Bill Anderson's interesting article today questions some of that. Also, he points out that Fortune reporter Bethany McLean, who later wrote the book, The Smartest Guys in the Room, had a secret romantic relationship with the lead prosecutor in the case, Sean Berkowitz.

One of the most interesting links in his article is this one to a Houston lawyer who believes that former Enron exec Jeff Skilling has a good shot at prevailing in the U.S. Supreme Court. Here are two key paragraphs:

Fastow testified at trial that he told Skilling about the Global Galactic agreement, which purportedly documented a series of illegal "side deals" between Fastow and former Enron chief accountant Richard Causey that guaranteed Fastow would not lose money on certain special purpose entities that he was managing. Skilling denied any knowledge of the purported agreement.
After Skilling's conviction, the Skilling defense team discovered Fastow interview notes that the Enron Task Force had failed to disclose to the Skilling team prior to trial. Among other things, those notes revealed that Fastow had told the Task Force lawyers that he didn't think he had told Skilling about the Global Galactic agreement. The Fifth Circuit characterized the Task Force's non-disclosure as "troubling" in inviting Skilling to file a motion for new trial with the District Court.

Bill Anderson, an economics professor at Frostburg State University in Maryland, also wrote some important articles (like this and this and this) on the Duke Lacrosse frame-up. I think he's turning into an excellent investigative reporter. The two things he's best on are (1) going after the U.S. [in]justice system and (2) going after lazy or corrupt reporters and newspapers.

Mark Twain once said, "Never pick a fight with a man who buys ink by the barrel." Well, the web has changed that. Now you can pick a fight and get the word out and not be afraid that you can't defend yourself when you come under attack. And I bet that drives many people at the NY Times, the WaPost, the L.A. Times, and others crazy.


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CATEGORIES: Economics of Crime



COMMENTS (5 to date)
Brian Shelley writes:

I once shared a train ride with an accounting professor who was apoplectic that I didn't understand what Ken Lay had done wrong. He kept telling me about off balanced sheet this and that, and I would ask, but how is that fraud for Mr. Lay? If you can't prove he knew about it, he never sold his stock and financially went down with the ship, isn't it more likely that he was just mistaken about the company's prospects? He just kept telling me about a few million here and there and revenue from these special arrangements, and I wondered how these amounted to a hill of beans for a company that peaked at $50B in revenue. Why would he know explicit details for items that amounted to less than 1% of revenue? I always thought that Skilling and Lay were innocent. The guys who the prosecution gave incentive to lie seemed more guilty.

Now Kuzlowski (sp?) seemed to have blatantly robbed the place blind, but he was always page 2 for some reason.

Doc Merlin writes:

"Well, the web has changed that. Now you can pick a fight and get the word out and not be afraid that you can't defend yourself when you come under attack. And I bet that drives many people at the NY Times, the WaPost, the L.A. Times, and others crazy."

Absolutely! Sarah Palin's facebook page is a great example of this very thing.

Yancey Ward writes:

David,

I am glad to see Anderson starting to get some recognition for his work. I have become quite a fan over the last 2 years, and some of the stuff he is uncovering is pretty frightening and disgusting. He is fearless and thorough.

Vangel writes:

Sadly, the American legal system care more about politics and populism than the rule of law. Anderson has done a good job showing that just outcomes are not always important to the people who operate in the justice system.

Great article and thank you for the pointer to Anderson's as well. You've turned me into a fan of his as well.
JDW

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