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How to Interpret the Fastow Verdict


Milken. Ebbers. Fastow. One of these is not like the others. Poor Bernie, with no chance at the speaker tour or to save the family name with a charitable foundation. At least Andrew will still have a crack at public redemption.

With the announcement of Fastow’s 6-year prison term, I’m sure many pensioners, 401(k) holders, and business professionals are asking, “and then…?” I often wonder if I’m simply out of pace with the world around me, and don’t appreciate the standards of conduct that apply in society today. This pronouncement – and Greenspan’s recent “scrap SOX” makes me wonder what I’m missing. Clearly, the news of late isn’t making sense to me.

I’m quick to note that I didn’t follow the unfolding reality tv saga of Andrew’s repentance (or monitor on my webcam the comings and goings of the now retired Greenspan), but I am left thinking that the time doesn’t fit the crime. And it’s not that I want him to rot away in a prison system, studying law or learning foreign languages in the comfortable confinement of a federal cell. I just can’t imagine the look of shock on the faces of the thousands of Enron shareholders that have been waiting for this sentencing after the loss of their savings. “Prosecution, not persecution” – ?

I hope we’ll look back in 10 years, and note the early 2000’s as the era of revitalized governance, of corporations renewing their commitment to acting as responsible, ethical citizens. I know that much of the discussion around Sarbanes Oxley has centered in integrity, values, and transparency, and that domestic efforts to reform corporate governance domestically are having an impact on capital markets on a global scale. I hope in 10 years, we’ll look back and agree that whatever the cause, governance took a very important starring role in boardrooms and headlines for publicly traded companies.

I had hoped that in the absence of visible market reward for strong governance, we would at least see the painful consequences of unethical behavior. This sentencing message seems to contradict the Ebbers sentencing, making unethical behavior a very gray topic – and I thought we were getting close to a black and white issue.

But the bright shining light in all this? All that 529 money we are socking away for our kids might someday bring our college ages kids home with tales about an ethics lesson from Professor Fastow. If Andy can pull that page from Michael’s playbook as well.