The Enron Trial: Reasons Not to Watch

The Internet is abuzz with the beginning of the Enron trial.  The Glom has lots of news, including this prediction from two of the hosts.  The Houston Chronicle has a TrialWatch with frequent updates throughout the day.  Dave Hoffman at Concurring Opinions has labeled the Chronicle's live-blog a "must read" for corporate law nerds.  And the major newspapers are filing updates from the trial at least once a day.

For the most part, however, I've found that I'm not all that interested in following the trial.  That surprised me, because it seems like I should be.  But here are my reasons:

• The real bad guy is not on trial.  You can debate the "badness" of Lay and Skilling all day, but clearly the force of evil at Enron was Andy Fastow.  He developed the scheme, he executed it, he made millions in profits through a clear conflict of interest.  Special purpose entities were named after his wife and kids.  After that, Michael Kopper was his deputy in malfeasance, and Causey has copped a plea.  Like many criminal conspiracies, the worst offenders have pled, leaving trials for those who have the best case for innocence.  Lay and Skilling may or may not have really known what was going on.  Sure, even not knowing is bad, given their positions of authority.  And creating a culture of noncompliance is also wrong.  But Lay had left the executive ranks while much of the fraud was occurring.  And whenever I think of Skilling, I picture him (as described by Eichenwald) getting drunk on wine and curling up into the fetal position at a resort hotel.  Not the actions of an evil genius.
• The outcome may not rest on ultimate guilt or innocence.  Here are my concerns.  There is a good chance Lay and Skilling will be convicted even if they're innocent because of the baggage associated with the name "Enron."  Since we've been deprived of a public trial for Fastow et al., this is the only chance for a jury to wreak vengeance for all that Enron represents.  In addition, the question of guilt here is incredibly complex and revolves around issues like the "spirit" vs. the "letter" of accounting rules and securities regulations.  I'm a little worried that the lesson of the first Tyco trial is that juries can't handle complexity.  In an NYT video interview [click on the "Business News" channel to the right], Joseph Nocera of the Times says that the prosecution is "not [going] to get into the nitty-gritty of special purpose entities and accounting transactions."  He agrees with this decision.  Huh?  Don't you have to get into that to understand what really happened?  If both sides avoid complexity, the jury might decide the case based on their negative impressions about Lay and Skilling, rather than a real understanding of what happened.  Alternatively, Lay and Skilling might walk, even if they're guilty, if jurors can't really understand what it is that they did wrong.
• Enron overload.  It seems like we've heard a lot about Enron.  By way of empirical evidence, a search of the "JLR" database on Westlaw shows 355 articles with Enron in the title.  (By way of comparison, only 39 articles have WorldCom in the title, and only four have Tyco.)  Numerous books and a movie have chronicled the scandal.  Almost five years after the scandal broke, we're just getting to the trial?  Yes, a trial might reveal new information or at least provide direct testimony from folks like Lay, Skilling, Fastow, and Causey.  But in terms of my interest, I can't say the trial has me on the edge of my seat.

Don't get me wrong -- I'll follow the trial, and I'm interested to see whether we learn anything new through it.  But this trial is not the grand finale of l'affaire de Enron that it's being made out to be.  And I hope that we don't read too much into a victory for one side or the other.