The end is near - at least as far as prosecuting the most blatant
corporate indiscretions of the Enron era.
This week, separate trials are scheduled to begin for two of the
more prominent names on the government's list of pinstriped bad
boys: Bernard Ebbers, former head of WorldCom, and Dennis Kozlowski,
former CEO of Tyco International. Except for the upcoming trial of
former Enron executives Kenneth Lay and Jeff Skilling, most of the
marquee names will have had their day in court.
Experts say the trials already completed - and the jail sentences
under way - have had a big impact on corporate behavior. Lawyers for
white-collar defendants say that CEOs are now pressuring underlings
to state earnings accurately. Thanks to Martha Stewart, executives
are more aware of the dangers of lying to prosecutors. Corporate
leaders also know that Congress now requires them to personally
vouch for their companies' earnings statements.
In short, greed hasn't disappeared, but the path to riches is
more likely to follow the legal road map.
"The government has largely accomplished its goal of changing
corporate conduct in a major and significant way," says Kirby Behre,
a former federal prosecutor who is now a partner at Paul, Hastings,
Janofsky & Walker in Washington.
The change in attitude goes beyond the boardroom. Judges are now
inclined to take corporate misdeeds more seriously. And the general
public, which makes up juries, believes that white-collar crime is a
serious offense. "The bottom line is that it's more perilous to be
criminal defendants in a white-collar case than ever before," says
Despite these changes, the Securities and Exchange Commission
will not have to start laying off its investigators. For example,
only last week, the SEC charged Google, the online search firm, and
its general counsel with violations of securities laws involving $80
million. Both settled the suit, agreeing to cease and desist from
On the same day, the watchdog sued nine men who worked for the
food giant Royal Ahold for allegedly signing false audit
confirmations and sending them to the company's auditors. According
to the SEC, the amounts totaled at least $700 million for fiscal
years 2001 and 2002.
"The only thing the government can do with a heavy enforcement
budget is slow down the pace of fraud but never erase it," says
Christopher Bebel, a former SEC counsel and federal prosecutor. "The
government is never going to have the capacity to bring a halt to
fraud because greed ... will motivate businesspeople to cut corners
in order to line their own pockets."
There has certainly been plenty for the public to read about. The
most visible trial involved Martha Stewart, now serving time in a
West Virginia penitentiary. But there has also been the trial - and
conviction - of Arthur Andersen, the accounting firm involved in the
Enron affair. …