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No pity for ex-Enron bosses

In the Tampa Bay area business community, the reaction to the Enron verdicts was: They got what they deserved.

By By HELEN HUNTLEY and SCOTT BARANCIK
Published May 25, 2006

Kenneth Lay and Jeffrey Skilling won’t be sentenced for months, but New Port Richey investor Mike Mulligan has a suggestion for the judge:

“Put them in a hard-core prison and let the prisoners take care of them,” he said. “Instead of a cushy jail where they tend gardens and mop floors, I’d rather see them do hard time, break rocks with hammers.”

There’s not much sympathy in the Tampa Bay area for the executives who presided over Enron’s dramatic fall, destroying jobs and shareholder wealth and trust in the process. Enron’s former auditor, the once-prestigious firm Arthur Andersen, was among the casualties, along with its 85,000 employees.

“The management was ripping off the employees and the stockholders,” said Zephyrhills investor Louis Curtis. Although he never owned Enron shares, Curtis said he has 90 percent of his retirement money in stocks and he’s counting on companies to be honest with him.

Some Tampa Bay area residents are hoping the convictions will have a positive effect.

“I think it sends a good message to anybody else who would be tempted … that the government’s not going to put up with it,” said Dunedin investor Matthew Baker. He said the trial reinforced the accountability standards put into place after Enron’s fall, including requirements for chief executives and their chief financial officers to sign off on financial statements. Known as the Sarbanes-Oxley Act, these tougher requirements are Enron’s primary legacy.

But others are more skeptical.

“Things have gotten better, but those guys pulling the big bucks are going to find ways to do whatever they need to do,” said St. Petersburg CPA Scott Lamer. He said auditors, especially for big firms, get too chummy with top executives. Nevertheless, he said he is “thrilled” with the convictions.

Tampa lawyer Rick Denmon, who heads the securities practice group at Carlton Fields, said people who serve on corporate boards in the United States already have absorbed Enron’s lessons: “Everybody’s afraid of a criminal or civil charge against them personally, or reputational damage for being asleep at the switch.”

The verdict does challenge the notion that if you have enough money, you can get out of anything, he said. “If you have been derelict in your responsibilities and feathered your nest at the expense of others, there’s no way out of it. You will face justice in this environment.”

Denmon said if corporations had been doing their jobs right, they wouldn’t have Sarbanes-Oxley to worry about.
Among those who have felt the sting of the new requirements is Bob Merritt, former chief financial officer of OSI Restaurant Partners in Tampa.

He left his job because he said the post-Enron rules turned the CFO into the company policeman, making it impossible for public companies to focus on operations. Merritt said Enron’s other board members should be held accountable, as well. “They knew what was going on.”

Ken Weiss wants prosecutors to go after Enron’s lawyers.

“The thing that galls me the most is that James Derrick, the general counsel of Enron, isn’t in jail,” said Weiss, a former general counsel for several Tampa Bay companies, including Checkers Drive-In Restaurants, Florida Progress and Home Shopping Network. “This could not have occurred if the lawyers had been doing their job.”

But he said Lay and Skilling also had to be deeply involved. “I’ve worked at five public companies. Nobody would dare make changes to the accounting, book revenues or make changes to the reserves without consulting” the CEO.

Some lamented the fact that it took so long to bring Lay and Skilling to trial after the company’s 2001 collapse.

“If justice were swift, it would be a greater deterrent,” said Clearwater retiree Mike Rosenthal. “Of course, there are appeals going on, which will just tie up the system and probably bring no change in outcome. It just gripes me that it can go on for so long.”

It’s not over yet, said Brian Phillips, a white-collar defense lawyer and former federal prosecutor in Orlando. Still to come are the inevitable appeals, civil trials and asset seizures.

Beth Brown, former Florida spokeswoman for Arthur Andersen, said she was somewhat relieved by the verdict. “I don’t know what I would have said if they were not found guilty.”

Brown said she didn’t hear a peep about the Enron case at a reunion this month of former Andersen employees. About 150 members of that tight-knit group gathered for cocktails and hors d’ oeuvres at the swanky Renaissance Tampa Hotel.

“No one was standing around talking about Ken Lay or Jeff Skilling saying “I hope they go down,’ ” she said. “People have moved on.”

[Last modified May 26, 2006, 00:02:25]