Employees Were The Big Losers

Was the “E” crooked?

Richard Causey was the accounting chief (boss) for Enron when the company collapsed after a shake up of top management in a securities scandal. In 2001 top management at Enron, including the founder and CEO were all implicated in a nasty deception, which ultimately caused financial distress for the employees.

If you ever wonder if executive management of companies get what they deserve, they do. Bernie Ebbers, the former head of Worldcom ultimately got jail time for his part in the slightly problematic accounting issue to the tune of 14 billions dollars. However, Mr. Ebbers was sentenced to 25 years and guilty on all counts. He will be 85 if he leaves prison sans a victory in appeals court. He was at the helm during the biggest corporate fraud in U.S. history. Again, the employees and their 401Ks got hit the hardest. 20,000 of them lost their jobs.

Back to the big financial boss at Enron, Mr. Causey. Based on the longest sentence ever handed down to a top executive, the ex-execs from Enron have had some time to attend sentence reduction management classes with their attorneys. Mr. Causey decided not to support his former bosses, CEO, Jeff Skilling and founder, Ken Lay. They all face charges of conspiracy and fraud. He is going to cooperate with the government and pleaded guilty on just one of his charges. He was facing multiple counts of conspiracy and fraud just like the others. In exchange he gets 7 years, well actually 5 years in prison.

He is expected to spill the beans about what his two bosses did at Enron in hopes that the government will have enough evidence to convict Skilling and Lay. We saw what kind of sentence Mr. Ebbers got.

Mr. Causey’s attorney said he will “tell the truth” about what he did at Enron. Well that is a bit of a stretch considering he is only pleading guilty to one count isn’t it? So will he have to lie about the things he did concerning the other counts? The CFO, Andrew Fastow has already been sentenced to 10 years for pleading guilty on two counts for his damaging testimony against the founder and ex-CEO.

Do any of these guys even think about the employees that were affected by this mess? First the employees get hit with job losses and investment losses and even loss of life savings. Mr. Causey claims to not have profited from his involvement, so he is thought to be a more credible witness than Mr. Fastow. Mr. Fastow and his wife were embroiled in their own financial scandal.

Mr. Lay, the founder has built his case about not knowing about the wrongdoing in his company.
Now Mr. Lay claims that Mr. Causey has pleased guilty to a crime he didn’t commit because he did not have the money to defend himself and would face a potential 40 year sentence.
“It’s a sad day for due process,” Mr. Lay said.

Due process? What about the employees? Again I ask a simple question.

Mr. Lay and Mr. Skilling did not bargain with the government.
Enron filed for bankruptcy in December 2001. The company has been investigated and it is thought that Enron was using partnerships to hide more than $1 billion in debt to inflate profits and keep the market in the dark. Again 4,000 employees lost their jobs and life savings. Many investors lost billions of dollars.

Bottom-line, the employees lost big time. Many Worldcom employees lost all their savings and college money for their kids. The day I heard Worldcom’s ex-chief, Mr. Ebbers got sentenced on all counts and was going to jail for 25 years, I exclaimed, “Yes!” I heard it on the radio and I could not believe that such a high profile, highly successful man actually got a tough sentence.

We should all learn from this national travesty.