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July 2, 2009

The Chronicle's continuing Enron hypocrisy

houston-chronicle-layoffs Being generally an optimistic sort, I keep thinking that the financial crisis of the past year or so will eventually prompt the Houston Chronicle to reconsider its generally biased coverage of the demise of Enron over the past seven years. After all, it's not every day that the Fifth Circuit Court of Appeals concludes that a newspaper's coverage of a particular event was a major factor in the creation of a presumption of community prejudice.

Nevertheless, the local paper's recent coverage of disgraced financiers R. Allen Stanford and Bernard Madoff reflects that no such soul-searching is likely to emerge anytime soon down on Texas Avenue.

Take this recent Loren Steffy column in which he asks the following: "Why, then, does Madoff get a sentence six times that of [former WorldCom CEO Bernie] Ebbers or Enron’s Jeff Skilling?"

I mean, really. Is the answer to that question all that difficult?

Madoff turns himself in and admits from the outset that he was stealing money from investors for years by running a Ponzi scheme. Any wonder why he was hammered by the sentencing judge?

Ebbers was essentially convicted of covering up accounting fraud at WorldCom, but he at least put up a colorable defense that he was not responsible for such matters and had no knowledge of the fraud.

Moreover, Skilling wasn't even accused of accounting fraud. He was convicted essentially of making too many rose-colored statements about Enron, notwithstanding that his belief in the truth of those statements was never seriously challenged.

Finally, neither Ebbers nor Skilling stole a dime from the investors of their respective companies. Yet, Steffy insists upon comparing them with the larcenous Madoff. who essentially stole tens of millions. The Greed Narrative prevails again.

But here's my main point. Now that what happened to Enron has happened to numerous other trust-based Wall Street firms, shouldn't the Chronicle be advocating that similarly aggressive criminal prosecutions be mounted against numerous executives of the Wall Street firms who made the same type of rosy statements about their wobbling companies as Skilling made about Enron?

Now, I don't believe that there was widespread criminal fraud at Enron. The only true criminal fraud there was relatively small and isolated in Andrew Fastow's Global Finance unit. Similarly, I don't believe that there was widespread criminal fraud at the Wall Street firms that endured the same downward spiral that engulfed Enron.

But inasmuch as the Chronicle fanned the flames of criminal prosecutions against dozens of Enron executives and others involved in transactions with them, shouldn't the Chronicle be taking the same position with regard to executives at the similarly-situated Wall Street firms? Or at least shouldn't the Chronicle be explaining why it threw dozens of Enron executives under the bus even though it now fails to advocate similar treatment for executives of the failed Wall Street firms?

It seems like the least that the local newspaper can do.

Posted by Tom at July 2, 2009 12:01 AM |

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