"What I did was reprehensible, and it is not easy to look at yourself and to recognize that about yourself and to admit it. And it took me a long time to do that, and some days--some days it's still hard to do that. I've destroyed my life. All I can do is try to take what's left, ask forgiveness, and be the best person I can be."
— Andy Fastow, former Enron CFO
The above quote is hardly the stuff of which corporate dreams are made. It is also not how Andy Fastow, when at the outset of his career, likely imagined he’d grace the cover story of Fortune magazine. As a recently minted MBA grad, Fastow was ready to take the world by storm—described as exuberant, sharp-minded, risk taking—seemingly a dime a dozen among the ranks of an institution like Columbia Business School. Less than 20 years later, Fortune describes him as "shrunken and gray," facing a 98-count indictment, appearing far older than his 44 years—in what seemingly should be the prime of his life.
Before disbanding for spring break adventures earlier this month, 150 MBAs gathered in a classroom to be shocked, riveted, appalled, and experience a dozen other emotions for the Sanford C. Bernstein Leadership & Ethics Board’s second screening of "Enron: The Smartest Guys in the Room"—the Oscar-nominated documentary telling the horror story of the fall of Enron—arguably the greatest and most unexpected scandal ever to rock corporate America. The screening was well timed as the trial of former Enron executives Kenneth Lay (Chairman/CEO) and Jeff Skilling (President/COO) is now drawing to a close following weeks of dramatic testimony.
Lay and Skilling will face at least 25 years in prison if convicted on charges of conspiracy to defraud investors and personally gain from Enron stock price inflation. Both men claim they are innocent and refuse to accept responsibility or accountability for the crumbling of the corporation they ran. Instead, they are taking yet another step back from the wreckage and pointing the finger at ex-CFO Andy Fastow, their former prodigy and the architect behind Enron’s synthesized earnings through his string of financial schemes and fabrications.
This is the theme that echoed throughout the film and the lively student discussion that followed it: one of utter, unapologetic non-accountability on the parts of the guilty Enron execs. Non-accountability is a vice that has existed since time immemorial but has taken on a whole new tone as we surf through the digital age. Not only has our reliance on e-mail made countless people blatantly ignore grammatical rules and correct spelling as they hastily spit out messages in short-hand, it has also compounded a far darker negligence. Technology has made it far easier for the average person to avoid the direct consequences of words and actions. The advent of the firing or job turn-down by e-mail, or even the break-up by Blackberry, has made it easier to avoid looking a person square in the eye, saying: "This is what I’m doing to you and here is why." Technology has become an all too convenient cloak to hide behind, one that protects us behind a digital shield of non-accountability. "I’ll just send an e-mail." What does that really mean? "It’d be far easier, I’d save so much hassle and personal emotion by distancing myself electronically. I won’t have to hear the quiver of disappointment in his voice, I won’t have to see the wavering loss in her eyes. I’ll take the easy way out. Just type, hit send, and boom—be done with it, wash my hands of it, and never look back."
I am by no means arguing that technology was responsible for the downfall of Enron, or for thousands of employees seeing their hard-earned life savings evaporate without an apology or explanation. The analogy may seem a stretch but it is precisely this mentality of emotional distance and non-accountability that facilitated the "smartest guys in the room," the senior Enron executives, to sleep at night while deceiving thousands of employees, investors, and the world at large. This goes to show that an individual is not solely responsible for corruption, but that the tools, systems, and organization that sees the corruption play out beneath its watch also play a vital role.
Take Enron: Fastow rapidly ascended the ranks and became what some have dubbed "a wunderkind of deception and manipulation" because Lay, Skilling, and senior ranks privy to the fraud encouraged and enabled him to do so not in spite of, but for his deceptive abilities. In the up-or-out, deliver-numbers-always culture of Enron, Fastow was painted to be the white knight of this crooked fairytale. Equipped with Skilling’s directives from the top—"get me as much of that juice as you can" (translation: keep artificially inflating earnings to the best of your ability)—Fastow ran with the ball, meeting his bosses expectations and then some. Despite his claims of innocence, Skilling’s glowing performance evaluations of Fastow tell a different story, lauding his "creative financial mind [and] very clear sense of Enron’s strategy and ability to support it." The only part left unwritten was the fraudulent ends to which that creativity and clear sense were the means.
What an organization values, how it communicates internally, and what it tangibly rewards through official or unofficial incentive structures sets the rules for the game that many type-A personalities—concerned with climbing to the next rung of the ladder as quickly as possible—may play by and not bother questioning. Organizational cultures can be that powerful—snow globes in which employees live out 16-hour days and are blinded by the flurry of internal politics, competitive strife, and accepted and encouraged behavior. In such cases, both the employee and organizations are at fault, both choosing to hover above the law and ignore the moral compass by which the rest of the world functions. As Enron president and COO, Skilling was famous for encouraging such fierce inter-employee competition—pitting executives against each other so he could blind them and better maintain control. Living in awe of the talent surrounding you, and in desperate fear of being kicked out of the equation via subpar performance, employees didn’t question the rules of the game, and so Lay and Skilling’s pantomime played out.
As the Enron trial draws to a close, it serves as a reminder to all ambitious professionals potentially caught in the blinding blizzard of an organization’s culture. In the race for the next rung of the ladder, never stop questioning. Never stop questioning small instances of your own personal behaviour—such as hiding behind an e-mail to avoid facing the personal consequences of a decision—never stop dissecting the rules of the game you play both at the office and beyond. These are behaviors that can all too easily snowball from minor habits into a lifestyle that ends with a 98-count indictment like Fastow, or a suicide note as the one written by CBS alumni and former Enron vice chairman Cliff Baxter. Don’t stop turning the lens on yourself and those around you by asking why. In perhaps the greatest irony of all, Enron’s corporate tag line "Ask Why" urged investors and employees to do the one essential thing they all managed to avoid until the whistle finally blew in 2001. It was that unquestioning acceptance that was the magical key to Lay, Skilling, and Fastow’s quid pro quo—how business was done and how miraculous numbers were made at Enron.
To learn more about the Oscar-nominated documentary "Enron: The Smartest Guys in the Room," visit www.enronmovie.com.
To stay current on the Enron trial, visit money.cnn.com/news/specials/enron/.
To learn more about upcoming leadership and ethics events, visit the Sanford C. Bernstein Leadership & Ethics Board events page.