Moral Aptitude

Ken Lay is alive and well and living in South America. At least that’s what some people say. And that’s what some people think. I guess it’s because his demise was the most timely death in the history of corporate-fraud-greedily-scamming-investors-and-American-citizen/employees (and don’t forget-little-old-ladies-from-Pasadena-struggling-to-pay-their-electric-bills).

How in the name of God Bless America did the founder and CEO of Enron get off so easily?

At least, that’s what some people say.

I don’t know. His death from heart failure on July 5, 2006 occurred just weeks after he was found guilty of 10 counts of fraud and conspiracy relating to the collapse of Enron – at one time the nation’s seventh largest company - four years earlier. He was facing 25 to 40 years behind bars. To that fact, some people say: “Pardon me?”

It certainly is true that the last few years have not been good for your run-of-the-mill honest investor or pension plan recipient. As the Enron stock was declining in late 2001 – months before the inevitably declared bankruptcy on December 2nd - the “buy” orders from the Florida pension plan administrator just kept rolling in. It’s too bad then-governor Jeb Bush didn’t step in to save the day. As chairman of the Board of Trustees for Florida’s pensions, he could have halted the $355 million in losses that pension recipients (school teachers and other public employees) took up the wazoo. Would you believe that Florida’s pension took the largest hit and the losses were three times greater than those of any other state retirement fund? Who would have thought? I guess sometimes those Bush brothers just have bad timing. Or really good timing. It’s all a matter of how you look at it. Of course, there were also the securities dealers, brokers, accountants, investment bankers, journalists, financial analysts and other “oversight” agencies that could have sounded an alarm. I think it’s fair to say that fiduciary responsibilities were just totally in the crapper.

I remember that from the time Enron filed bankruptcy, it seemed like every other month - over the next few years - we heard stories about one multi-billion dollar company after another admitting they cooked the books and defrauded investors. As an American citizen, of course, I was concerned. As a CPA, I was, on one hand outraged, and on other trying to defend my profession. In that regard, I think that what these executives – CEOs and CFOs at Enron, WorldCom and HealthSouth - should have done to explain their actions is taken the advice of Ed Norton who said to Ralph Cramden on the eve of his IRS tax audit: “Just tell them you were drunk when you prepared your taxes.”

Wait a minute; at the congressional hearings didn’t these guys repeatedly take the fifth?

They certainly had capitalized on an unscrupulous intoxication.

And it seems that there is a trend (at the top) for no one to take responsibility for their actions. After the Enron collapse, President Bush signed legislation called The Sarbanes-Oxley Act of 2002. Hey, no one (else) is gonna fool the public on his watch! The purpose of The Act, according to the American Institute of Certified Public Accountants, is to “reinforce investment confidence and protect investors by improving the accuracy and reliability of corporate disclosure.” Section 406 of The Act states that “The SEC shall issue rules that require each issuer to disclose whether or not, and if not, the reasons therefore, such issuer has adopted a code of ethics for senior financial officers.”

I’d like to see the “if nots and reasons therefore”. You know the excuses for not having a go-to guide for morality. Because everyone knows that without an actual written Code of Ethics, senior financial officers would allow all hell to break loose. Apparently people don’t know enough to be morally responsible without looking at words assembled together in paragraphs and printed on pieces of paper. Let’s see, should I set up fictional subsidiaries offshore to hide losses boosting current financial position long enough for me to sell off my stock, makes millions, hide the profits, ruin employees’ retirement and citizen’s investment portfolios – all the while smiling and running a propaganda machine that declares everything is fine and dandy?
Tough call.

The fallout from Enron, and the resultant Sarbanes-Oxley Act hit the accounting profession hard. The volume of the law, increased oversight, and connect-the-dots accountability is enormous. In addition, CPAs are not able to renew their licenses without taking a class called “Ethics.” I’m no dummy. I signed up right away for the course. The instructor began the session by posing the following questions: Where do ethics come from? Your parents? Your community? Your peers?

Those are areas I’ve certainly contemplated. Because during that class I was thinking about a tax client I had in the mid-1980s – a woman who had recently separated from her husband of 30 years and had never filed a tax return on her own. In early February of that year, during the preparation of her return which was very easy and straightforward –prepared pro bono - I told her she would owe a small amount of money and instructed her to file and pay the amount by April 15th. Every week, for the next eight weeks, she called me with a frantic question about her return:

(1) “The box boy at the Acme told me I have to declare my state refund.”

“Only if you itemized the year before” I responded.

(2) “The man who cleans my windshield told me I can deduct the cost of commuting between my first job and my second.”

“Yes” I replied “But your second job is across the street from your first.”

And my favorite

(3) “My friend Martha’s son’s girlfriend’s neighbor’s cousin’s roommate’s sister said….”

You get the picture.
Who was this woman?
My mother

I’m not sure if one’s background, community, or environment can predict future behavior. I’m certain it can influence it – one way or another. There are twists and turns at every learning curve in life. And then there that’s darn imprinting thing. You know, watching and absorbing subconsciously. In the end, who you are and who you want to be – morally – should absolutely fall under the radar of decency. Perhaps it’s not too late to sign Bush and Cheney up for an ethics class.

Ken Lay was the son of a Baptist preacher from Missouri. I assume he spent many years listening to sermons about right and wrong. Who would have thought that little Kenny would grow up to be so morally deceitful – and on such a large scale?

Where is he now? I don’t know. But I do know that – for me – being able to perceive right from wrong is so easy a caveman could do it.

Lynn - NOTTV
Copyright 05/07