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The Enron story exposes a faultline

David Teather

A gulf between the super-rich and the ordinary people in America

Houston (Texas): In the dock were two men once worth hundreds of millions of dollars who had rubbed shoulders with Presidents. In the jury, eight men and four women, including a teacher, a dairy farmer, a dental hygienist, a real estate agent, a ship inspector and a roofing salesman.

There were many reasons why the trial of the former Enron bosses, Kenneth Lay and Jeffrey Skilling, resonated around the world.

Implosion of economy

The collapse of Enron in December 2001 came to represent the implosion of the so-called new economy. There was the political intrigue; Mr. Lay had been a friend of the Bush family. Enron's demise also marked the beginning of a period of lurid scandals among some of America's biggest corporations.

For those most deeply affected by Enron's bankruptcy though — the thousands who lost their jobs and their life savings that had been invested in company shares — it represented something else entirely. The Enron story had exposed a faultline crossing modern America, the widening gulf between the country's super-rich and the ordinary people who struggle to get by. For much of America it was difficult to view the case through any other prism.

The jury returned its verdict on Thursday after just over five days of deliberations. Skilling and Lay were convicted on almost all of the charges against them and are likely to spend the rest of their lives in prison.

The company had its headquarters in Houston, and it was the venue for the trial.

Theatrics at trial

In a final flourish of theatrics during closing arguments that appealed to the class divide, the government prosecutor Sean Berkowitz had produced a large monochrome cardboard display with the word ``truth'' emblazoned on one side and ``lies'' on the other. `You can't buy justice.'

"You get to decide whether they told truth or lies, black and white,'' he told the jury.

``I'm asking you to send them a message that it's not all right. You can't buy justice; you have to earn it.'' According to the defence, the trial was as cynical a piece of demagoguery as any since the Salem witch trials.

It had taken prosecutors more than four years to bring Skilling and Lay to trial. In the meantime, other scandals had erupted at companies including WorldCom, Tyco and Adelphia and executives either cleared or sent to prison.

Skilling had faced 28 charges and Lay, the son of a Baptist minister, six.

The Government contended that Enron was experiencing mounting difficulties in the late 1990s and that the two men conspired with others to give the impression that the company was in health, through ``accounting tricks, fiction, hocus-pocus'' and ``outright lies.''

Enron leaves a legacy. The company has become shorthand for corporate wrongdoing. Corporate governance laws in the U.S. were tightened as a result of Enron and the ensuing scandals. Enron's auditor Arthur Andersen was driven out of business. Wall Street banks have paid billions in restitution.

For the likes of Enron's former employees, that matters little.

- Guardian Newspapers Limited 2006

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