Analysis: Skilling May Become Enron Scapegoat

Oct. 22, 2006 — -- It's great to be the last man standing if you're a contestant on a reality TV show.

It's an altogether different situation if you're a defendant awaiting sentencing in connection with the largest and most notorious corporate fraud in American history.

That's exactly where former Enron CEO Jeffrey Skilling will find himself on Monday.

The natural tendency will be to paint Skilling as the arch villian and blame him for all that was wrong with Enron. While he's hardly an object worthy of sympathy -- far from it -- we should avoid this oversimplification.

Remember that Enron was never some elaborate scheme mapped out in a darkcorner of a Houston boardroom. It evolved over time as a crime ofopportunity. At this point it is not so much what happened that matters,but how it happened.

It's safe to say that Skilling, Lay and the others never set out to builda financial house of cards. Driven by the numbers game that Wall Street lives by, they gradually lost touch with the consequences of their actions and, worse, abdicated their responsibilities to their employees and shareholders.

But it took the complicity of many members of Enron's upper management and at least the tacit approval of a long list of outside professionals to allow it to happen. To make this all about Skilling is to miss the lesson that Enron teaches.

It won't be easy. With the untimely death of his co-defendant, former Enron CEO KenLay, Skilling now stands alone atop the smoldering ruins of a company that once claimed revenues of $111 billion and was named "America's Most Innovative Company" for six consecutive years. Only last week, Judge Simeon Lake III vacatedLay's conviction, essentially sending the government back to the drawingboard in search of millions of dollars in ill-gotten gains to fill therestitution coffers for the many victims of the Enron scandel.

For Skilling, it means that the government will now look to him for the lion'sshare of the restitution based upon his criminal conviction.