BLACKER THAN BLACK
We are not naïve enough to ask for pure man;
we ask merely for men whose impurity does
not conflict with the obligations of their job.
Where there is no vision, the people perish.
Bible, Hebrew, Proverbs 29:18
Quoted by J.F. Kennedy on the
eve of his assignation
THE BIRTH AND DEATH OF HUBRIS
Psychopaths forever are running freely through the business world, creating empires, building images, and utterly destroying the foundations of trade and commerce. From the chaos of destruction their profits skyrocket. While the investors, consumers, and workers experience loses, the least-principled people rise to the top. I have watched the birth and death of many businesses, from corporations to small ventures, but claim no special knowledge about the details of many business declines. Nevertheless, the summaries I have collected tell the basic stories.
The rise and fall of the corporation Enron is a classic example of the warp-speed fraud that can both build incredible corporate giants and initiate activities that affect the lives of thousands of employees and hundreds of creditors. With lightning speed Enron rose as a model of business acumen and community excellence, only to collapse under the weight of corruption, fraud, and narcissism, ending in bankruptcy, suicide, prosecution, and shame.
Emerging in the 1990s as a prototype of modern corporate empires, with headquarters in Houston, Enron executives assumed that owning assets and manufacturing products were old-fashioned and unnecessary in the new-age of information flow and electronic management. The company would build an asset, such as a power plant, and almost simultaneously claim a profit on their books based on projected profits. When the revenue was less than expected the corporation transferred these assets to an off-the-books corporation and didn’t report the loses on the Enron balance sheet.
The attitude of the CEOs Ken Lay and his successor Jeffery Skilling was that profits are a manifestation of accounting practices, not revenues. Schemes were devised by CFO Andrew Fastow to hide losses with the use of special purpose entities (SPE) and issue common stock to compensate for the losses. It was a Ponzi scam where profits were always assumed and losses were hidden until they could become profits. By October of 2001 the company posted its first quarter loss and closed its “Raptor” SPE so that it didn’t have to issue 58 million shares of stock.
The practices of Enron finally triggered the attention of the Security and Exchange Commission (SEC), opening investigations that highlighted the dubious practices of Enron. A few days later Enron changed pension plan administrators, preventing employees from selling their shares in the company. It was a shock felt ‘round the world.
The company was in free fall, and filed for bankruptcy in December of 2001. Prosecutors ended the charade and thousands of workers and creditors lost everything. Enron will go down in history as an example of greed and hubris in the corporate world, a symbol of glitzy psychopathy. I see the saga as the early backbone for the new wave of big government and the unrestrained ability to elevate corporate euphemisms to the status of social virtues.
Del Wolf Thiessen, Professor Emeritus, Psychology, University of Texas at Austin, October 31, 2014.