Sunday, May 28, 2006
Lay and Skilling get convicted, and I don't understand. I await the publication of some journalistic accounts. I hope that will catch me up on what exactly the frauds consisted of. I understand generally the idea of hiding losses through complex derivative transactions and insider trading after 9/11, oh, oops, I meant to say 9/6. But given that I teach corporate law, I suppose I have some obligation to know the story in some detail, even though I find it all rather depressing, rather than an exhilirating confirmation of the essential rot at the heart of blah blah blah. What I don't understand is what makes Lay and Skilling tick. First, if you are already really rich, why take foolish chances to get somewhat more risk? And second, if are going to engage in fraud, why not put ten or twenty million in a few offshore accounts, as well as a spare passport or two under a flagstone in the garden? These two guys are going to spend the rest of their lives in a federal penn. That has got to come in second to fishing for carpies or whatever they have in the upper Orinoco. I asked my lovely wife Jeanne about this, and she suggested that it was just part of the arrogance of such people that they can't believe they will be caught and convicted. Perhaps that's it, and why I can't understand what Lay and Skilling were thinking. While they perhaps thought it would be impossible to be caught, my tendency is to think it would be impossible to get away with such things.
I also don't understand what the defense lawyers thought they were doing. Is it not possible to convince your client not to seem arrogant, to at least fake humility and sorrow? It must be harder to control clients than I realize, or do the defense lawyers just not care that much as long as they get paid? In retrospect, it also seems that Lay would have been better off pleading to something, if that was a possibility, though maybe it wasn't. If they really are guilty, and I tend not to trust juries too much on this score, I don't feel sorry for them. They inflicted a lot of harm on a lot of people.