Enron and corporate sociopaths

Last week former Enron executives Ken Lay and Jeffrey Skilling were found guilty of fraud and conspiracy. Lay was convicted of six counts, including conspiracy to commit securities and wire fraud. Skilling was convicted of 19 counts of conspiracy and fraud.

On the same day, the verdict was announced in Ken Lay’s separate non-jury trial related to his personal finances. He was found guilty of bank fraud.

In January, 2004, Andrew Fastow, Enron’s former finance chief, accepted a 10-year prison sentence in a plea-bargain deal in which he agreed to testify against his former bosses. Had he not cut the deal, he would have faced 98 counts of fraud, money laundering, insider trading and other charges.

Naming the problem

All of these guys have been called sociopaths or psychopaths.

When Andrew Fastow testified in the trial of Ken Lay and Jeffrey Skilling, Lay’s defense lawyer, Michael Ramsey, did his best to challenge Fastow’s credibility. According to the Associated Press, Ramsey called Fastow a “sorry specimen of humanity” and “a psychopath.”

A blogger on Alternet.org said Jeffrey Skilling took the stand with contrived humility, proclaimed his innocence, and didn’t see anything wrong with Enron’s conduct. “It’s hard to see Skilling as anything but a sociopath,” said author Omnesha Roychoudhuri.

In fact, Dr. Robert Hare has suggested that executives of Enron —and WorldCom—may be corporate psychopaths. According to an article in Fast Company, Hare gave a presentation on psychopathy (the term he prefers) to law enforcement officials in Newfoundland back in 2002. Hare is well known in the criminal justice field, and his presentation started out with photos of hit men and sex offenders. But then images of these companies’ corporate executives flashed on the screen.

“These are callous, cold-blooded individuals,” Hare said, according to Fast Company. “They don’t care that you have thoughts and feelings. They have no sense of guilt or remorse.”

Justice?

Lay faces 45 years in prison for the securities fraud, and 120 years in prison for his bank fraud. Skilling faces a maximum of 185 years in prison. Last year, the former CEO of WorldCom, Bernie Ebbers, was found guilty of overseeing the company’s $11 billion fraud. He was sentenced to 25 years in prison.

Still, will having these guys in prison make up for the damage their actions caused? “Enron’s collapse resulted in the loss of $60 billion in market value on Wall Street, almost $2.1 billion in pension plans and 5,600 jobs,” USA Today reported. When WorldCom imploded, California’s state pension fund lost $565 million, New York’s fund lost $300 million, Michigan’s fund lost $116 million and Florida’s lost between $85 million and $90 million, according to the Associated Press.

The fact that the executives are convicted may make the thousands of people who lost their jobs or retirement savings feel better. But it won’t pay the bills.

So what is to be done about corporate sociopaths? The only answer is to keep them out of positions of authority to begin with. This will be difficult, because they are charismatic, cool under pressure and ruthless—qualities that many companies seem to equate with management skill.

As always, the answer is awareness. Awareness that sociopaths exist. Awareness that sociopaths are the most destructive personalities of the human race. Awareness that 1% of people are born sociopaths.

It’s up to the remaining 99% of us to keep them in check.