Whatever happened to the great wave of business bashing? Last year, with a handful of corporations facing well-publicized problems, the Left rejoiced. The Ralph Nader-types gleefully asserted that the scandals proved the inherent downside of capitalism — evil businessmen running criminal enterprises trying to loot the public.
Well, it turns out they shouldn’t have been so quick to declare victory. It now appears that conservatives were right. The scandals were not a sign of a systematic flaw, but rather a few isolated cases of individual misdeeds combined with the normal vicissitudes of the market. Neither of these things are an indictment of a capitalist economy.
The Left must be rather disappointed. They wanted a public lynching of every fat-cat corporate bigwig, but the huge wave of criminal indictments has not materialized. A small handful of executives have gotten in trouble, but the supposed bloodbath against corporate America has not happened. Even in the case of Enron, which was the most high-profile corporate scandal, it appears that the government’s effort to damn the entire company and prosecute every high-level executive is — at best — moving at a glacial rate.
This does not mean, of course, that there will not be further indictments, or that all former Enron executives are cleared of any wrongdoing. But if the company really was a criminal racket, prosecutors presumably would have much more to show for their efforts. Maybe, just maybe, the vast majority of Enron workers and managers were honest people, and their only “crime” was making bad business decisions and failing to succeed in a competitive market.
It will be interesting, therefore, to observe the media’s reaction to the new book by Sherron Watkins, the famed Enron whistle blower. Entitled Power Failure: The Inside Story of the Collapse of Enron, the book almost certainly will give the Left a new opportunity to portray corporations as sinister entities and classify all senior Enron executives as criminals. This may be difficult, in part because Watkins is hardly the one to be telling a morality tale. The former accountant and Enron vice-president did witness the debacle from the inside, but her own actions are far from stellar.
Watkins did not exactly act in a heroic fashion. She did send an anonymous memo to then-Enron CEO Ken Lay, but this was not a modern-day charge of the light brigade. Watkins’s famous memo mentioned “suspicions of accounting improprieties,” expressed worry about what this would mean for her personal resume, and offered a few suggestions about how to avoid getting caught. She then met with Ken Lay, who said he didn’t believe that there were any improprieties.
So what did Watkins do? Did she hold a press conference or alert government authorities? Hardly, it was congressional investigators that made her memo public. In an article for Forbes last year, Dan Ackman pointed out that she “has been hailed as a whistle-blower so often it’s starting to sound like part of her name. But a whistle-blower is someone who alerts the public. She never did.” This doesn’t make Watkins an evil person, but it also means she is not a modern-day Joan of Arc. In any event, she landed nicely. She has hit the lecture circuit, received a $400,000 advance for her new book, and even inked a movie deal. So much for worrying about her resume.
This is hardly the heroic picture of sacrifice presented to readers of Time. Watkins was one of three female whistle-blowers designated “Persons of the Year” in 2002, leading the magazine to breathlessly state: “These women were for the 12 months just ending what New York City fire fighters were in 2001: heroes at the scene, anointed by circumstance. They were people who did right just by doing their jobs rightly — which means ferociously, with eyes open and with the bravery the rest of us always hope we have and may never know if we do. . . . Their jobs, their health, their privacy, their sanity — they risked all of them to bring us badly needed word of trouble inside crucial institutions.”
The Left would like to portray Watkins as a feminist icon. Yet what has she done to merit praise? Her book reveals nothing new, and only tries to paint her as doing something more than what she really did. The book even includes a preposterous attempt to play the victim, saying that Watkins “ . . . had put her faith in the hands of important men and they had disappointed her.” But she was a corporate vice president, making $150,000 a year plus stock options. One would think that feminists would celebrate Watkins as someone who broke through the supposed glass ceiling. Instead, they instinctively resort to the politics of victimology.
This brings us back to the important issue: Was the Enron collapse a symptom of an evil corporate culture, and will this be confirmed by high-profile corporate scalps? The Justice Department badly wants to indict former CEO Ken Lay and top executive Jeff Skilling, but it is not clear that this will happen. None of the nine people indicted so far — including CFO Fastow — have been able to provide evidence against either man. Business Week recently highlighted the two radically divergent views of the Enron investigation. “Scenario A: Prosecutors are moving methodically in this complex investigation to build their way to the top. Or Scenario B: They don’t have a case against Enron’s former top executives, Kenneth Lay and Jeffrey Skilling, despite more than a year of intense scrutiny.”
Only time will tell, but it appears Scenario B is increasingly likely. In short, maybe we already know the truth about Enron. Like other companies through the course of history, it went bankrupt because of bad business decisions. Yes, there was some accounting fraud — spreadsheets don’t lie — but this is hardly a smoking gun that can be used to condemn all of corporate America.
So what is left? A Justice Department prosecution that may be turning into a persecution and some people in the media that are left with a hollow story about fat-cat CEOs and phony feminist icons.
— Daniel J. Mitchell is the McKenna Fellow in political economy at The Heritage Foundation.