The Twin Devils

18th February 2002

The Twin Devils


     I spent over 30 years as a part of Corporate America  –  20 of them at the Headquarters level. Our company, like many others, was driven by EPS (earnings per share), IAT (income after taxes) and the stock price. The company thrived for over 100 years and in the process survived its share of crises and tough times. Then it went down the drain and only a faint footprint in the sand remains. Gone.

    The company didn't fail because of technological change, the obsolescence of products, market changes, or foreign competition. It failed because of Greed and Ego. I call them the twin devils of management. When powerful top management becomes possessed by the twin devils, bigtime trouble looms straight ahead. And did it ever.

     Enron is bankrupt  –  financially and morally. The result of the entire investigation may result in criminal indictments, but the real crime is leading a big compnay into failure. All because of the twin devils  –  greed and ego  –  which overcome good judgment and morality all too frequently.  Now we have powerful guys taking the fifth and running for cover to protect their hides after they have cashed in for millions. And they knew what they were doing as they did it—  they just thought they could get away with it, or at least take the money and run, leaving behind the wreckage. And the ruined lives of many.

     From my experience, when there is a development that potentially can affect EPS, IAT or the stock price of a Company, all hell breaks loose upstairs at HQ. That's the way Corporations work. Nobody will convince me that the Enron top guys “didn't know” when hundreds of millions of dollars were involved. . Baloney  –  and the Andersen people knew also. A kindly assessment might be that they got in too deep and didn't know how to get out. And that's a very generous assessment.

     We can feel sorry for the Enron emplyes who put all of their eggs in an Enron stock basket. No doubt they were encouraged by the CEO, but I think they were more interested in a quick killing than a balanced portfolio.  Nobody twisted their arms. It was their choice and they paid the price. It is aways tough to learn that one's trust has been misplaced. The inevitable litigation will take years and the lawyers will smile all the way home from the bank.

     Unfortunately, some of our Congressional Committees smell blood and want to severely punish anyone remotely tied to Enron top managment. For the regulators, it is a golden opportunity to regulate more and more. In the process, I hope they don't over-react and screw up a good 401K/IRA system. But even if there is reform, there is no guarantee that all employes enrolled in 401K plans will make sound financial decisions. And legislative reform will not remove the twin devils from the Board rooms  —  from non-profits  –  or from Governments.  It is not just Corporate America or Enron.


posted in My Interests | 0 Comments