Leading lawyers have questioned the United States’s appetite for condemning white-collar fraudsters to decades behind bars, in a debate ignited by the sentencing of Enron’s former CE Jeffrey Skilling.
Skilling was due to appear before a judge in Houston to hear his fate. Legal commentators were predicting a sentence of 20 to 30 years in prison, threatening to overtake the record 25-year stretch for corporate fraud that was handed down to WorldCom’s boss Bernie Ebbers last year.
Some of those who lost their livelihoods when Enron collapsed have called for Skilling to spend the rest of his life in prison. Charles Prestwood, a former pipeline employee who lost his job and his pension, told the Houston Chronicle: ”I want him to see life without parole, for all the lies he told us and others.”
Specialists in white-collar crime say sentences have steadily become more severe in recent years. Some have suggested that whereas corporate fraudsters were once treated too leniently, they are now not being spared any mercy at all.
Lawrence Barcella, of the Washington law firm Paul Hastings, said: ”Over the past 20 years, sentencing guidelines for white-collar offenders have been ratcheted up regularly — not coincidentally, often during election years.”
He questioned whether decades of imprisonment were necessary for rehabilitation or as a deterrent for other executives: ”There seems to be no correlation between these sentences and what the underlying reasons for punishment are.”
The death in July of Skilling’s co-defendant, Ken Lay, has left the former CE as the ”last man standing” in the case. His defence lawyer, Dan Petrocelli, expressed concern that he was bearing the full brunt of public outrage. ”Ken’s death has put more focus on Jeff Skilling in the public eye, but the court must consider what is appropriate for Jeff Skilling in terms of what he is accused of doing,” Petrocelli said.
Although he has expressed sorrow for the pain of those who suffered in Enron’s collapse, Skilling has portrayed himself as a victim rather than a perpetrator. To the fury of former employees, he continues to maintain that he was unaware of any fraud at the company and intends to appeal against his conviction next year.
”He believes what he believes,” Petrocelli said, ”and he is going to face [his sentencing] with courage and conviction, and continue fighting the good fight.”
The courts have frozen $80-million of assets held by Skilling and prosecutors are seeking repayment of $140-million in assets and gains from stock sales.
His fate was sealed by testimony from Enron’s former chief financial officer, Andrew Fastow, who gave evidence against his one-time colleagues and in return received a relatively modest sentence of six years.
Not quite as smart as he thought, Skilling used to drive around Houston in a Mercedes with a number plate reading WLEC — world’s leading energy company. The 52-year-old was Enron’s key cheerleader and it was he who masterminded Enron’s strategy of hiding its losses in off-balance-sheet ventures. Born to a middle-class family in Pittsburgh, Skilling has a reputation for arrogance and impatience. At an interview for Harvard Business School, he was asked whether he was smart and famously responded: ”I’m fucking smart.” A former fraternity house member, he encouraged a macho environment at Enron, taking selected colleagues on high-energy trips motorcycling in Mexico and climbing glaciers in Patagonia. When an analyst questioned the firm’s progress in one conference call, Skilling dismissed him as an ”asshole”.
At his trial, Skilling told the jury that Enron’s collapse had prompted him to consider suicide. In 2004, he was picked up by police for erratic, threatening behaviour in a New York bar. He was arrested again last month in Dallas for public intoxication. — Â