Posted 5:27 PM by Robert

End Run At Enron Update

The mainstream media - which once prattled on about how "obvious" and "egregious" the Enron frauds committed by its top management would surely turn out to have been - seem to be gradually pulling about, like an oil tanker changing course. The latest evidence, End Run at Enron: Why Ken Lay will likely stay out of jail, an article by Jeffrey Toobin from the current issue of the New Yorker, as summarized in this press release:

Almost two years after the fall of Enron, it appears increasingly likely that [Kenneth] Lay and [Jeffrey] Skilling will never face criminal charges," Jeffrey Toobin reports in "End Run at Enron." The Enron investigation, he suggests, "has been a demonstration of the limits of criminal law." Lay and Skilling have eluded prosecution because of "the complexity of the corporate enterprise they built; the overlapping and sometimes competing investigations of the company; and the reluctance of witnesses to come forward." One investigator tells Toobin, "Every other white-collar case in history is arithmetic. Enron is calculus." The trouble is that "first, we have to explain it to ourselves, so that we know what was going on. Then we have to figure out if it's illegal. Then we have to figure out how to persuade a jury that it's illegal. And then we have to figure out how to explain why it's illegal even though the accountants and the lawyers said it was O.K." Andrew Fastow, Enron's former chief financial officer and the highest-ranking company official to face indictment so far, is not co?perating with the government, although his wife has also been indicted. "In Prosecution 101, Fastow should have co?perated a long time ago," the investigator says. "But he hasn't." While the Enron task force "has made steady progress against mid-level players," Toobin writes, in the end, "prosecutors may be able to show only that Lay and Skilling presided over a culture where...pervasive dishonesty flourished—which is not, in any legal sense, a crime.....The sad truth of the criminal-justice system is that when everyone is guilty, no one is.

A culture where...pervasive dishonesty flourished? Isn't that the kind of thing people said about the New York Times newsroom after the Jason Blair affair, when Howell Raines ran it? Has that changed?

And, of course, that was the same Howell Raines who ran all those crusading Times articles about Enron.