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January 30, 2006
Enron’s Ken Lay: A Reputation as a Snake in the Grass
PHOTO: Snake in the grass
“He is a snake in the grass, a selfish, greedy man and holier-than-thou.”
Prospective jurors’ thoughts on former Enron chairman Ken Lay.
He is the devil and a high-class crook.”
Comments from prospective jurors regarding former Enron CEO Jeffrey Skilling.
The corporate trial of the century begins today in Houston. Many reputations within the Enron case are in crisis, especially the reputations of Ken Lay and Jeffrey Skilling. In addition, the reputation of corporate America and the U.S. attorney’s office are also on the line.
Ken Lay, Enron's former chairman, faces seven counts in the trial, including conspiracy and fraud. Former Chief Executive Officer Jeffrey Skilling faces 31 counts, including conspiracy, fraud and insider trading. Both men have pleaded not guilty.
Ken Lay cartoon
Mr. Lay is either the architect of one of the most intricate and devastating fraud schemes in corporate history or an unwitting and hapless entrepreneur who got in over his head while everyone around him was massaging the books.
Some observers have described Enron as the most pivotal moment in the history of corporate America. Hyperbole, maybe, but the collapse of the company is of the order that demands superlatives.
Forget Richard Scrushy; pay no heed to Bernie Ebbers. Dismiss even, if you can, Dennis Kozlowski - his $6,000 shower curtain, $15,000 umbrella stand and $2,900 of coat hangers belong to yesterday. This trial will be the ultimate test of the so-called idiot defense. The idiot defense goes something like this: “I was the CEO, and I may have been asleep at the wheel, but I’m not a crook.”
It didn't work for Big Bad Bernie Ebbers, formerly of WorldCom, who faces 25 years behind bars. It didn't work for Tyco’s Kozlowski, who faces a shorter, yet rather more uncomfortable eight years in a state penitentiary. HealthSouth’s Richard Scrushy was acquitted of fraud, although his freedom came at the price of having everyone consider that yes, he was as stupid as he claimed, prompting a new boom in the industry for accountant jokes.
PHOTO: Ken Lay in handcuffs
If Bernie Ebbers was charged with, quite literally, fiddling while WorldCom burned, Ken Lay stands accused of conducting the entire orchestra as Enron was exploding around him.
Not only that but prosecutors have a host of witnesses that will testify they saw him setting the fuse, including his former finance chief, Richard Causey, who at the end of 2005, having repeatedly sworn to one version of events, suddenly decided he remembered a version of reality that was markedly different.
As a man of faith, Mr. Lay undoubtedly knows that while there is grace sufficient for him and us all, the Lord will ultimately judge his actions and his punishment. But for now, legal justice for Enron's victims is the goal in the trial.
Mr. Lay feels badly for the victims and regrets the financial loss, but then grasps for scapegoats. Like many in our day, he has mastered the art of empty confession. Instead of apologizing for personal wrongdoing, such leaders assume collective accountability. They seek moral credit by taking "responsibility" and then accuse others like a renegade chief financial officer and overzealous prosecutors.
PHOTO: Former Enron CEO Jeff Skilling
Over the past few months, Kenneth Lay has embarked on something of a blitz of public appearances. After several years hidden from view, the former chairman of Enron has been putting his best face on, defending himself to anyone who will listen. Most of his audiences, though, have been carefully picked - TV hosts and business groups unlikely to be overly hostile. His PR campaign seems to be falling on deaf ears for many reasons.
A few reputation management tips from the Reputation Doctor for the Enron boys:
• It is hard to learn from a mistake you don’t acknowledge making. Both Lay and Skilling know the truth, but continue to run from it. Sadly, it will catch up with them soon.
• Their spin is not working. Ken Lay is pushing his website and even buying ads on Goggle to drive traffic to try to influence public opinion. He forgot one important rule: if people don’t believe your story, the PR campaign is a waste of time and will continue to damage your reputation.
• True faith in Jesus Christ should have humbled you to take full responsibility for your actions. Ken Lay is the son of a preacher and a trustee in his Methodist church. Former WorldCom CEO Bernie Ebbers was a deacon in his Baptist Church. Both are held to a higher standard as leaders within their faith for their deceit, lies and unrepentant hearts. They may pay an eternal price for doing so.
• Enron’s former employees, investors and customers will not rest until they hear the truth, the whole truth and nothing but the truth. Once again, we will all hear the horror stories of Enron in the news during the trial. Employees will pull at our heartstrings and tell us how they literally lost everything. Skilling had a tough-guy image while at Enron, but was also led away in handcuffs for the world to see. The perp walk is an embarrassing visual, but their embarrassment still has not resulted in transparency, humility and honesty. However, the trial will bring some accountability for all. Thank God for that.
Remember, do the right thing when your reputation is in crisis. It will be difficult, but the ultimate rewards will be great. Why? Because Your Reputation Is Everything! ™
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.ReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.
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