An op-ed by Bob Webb for For A Change magazine

For weeks Enron competed with the war on terror for headlines. The collapse of America’s seventh largest corporation was an explosion different only in kind and degree from that of 11 September.

While Enron’s top executives made millions from company stock they sold as the firm headed down, thousands of their employees—naware what was happening—lost all or almost all their investments. The debacle brought a billion-watt media focus not only on Enron’s “creative accounting” but also on its massive campaign contributions to both major political parties. As with most such contributions, the donor gained access denied ordinary citizens.

Just as the Houston energy giant was brought to its knees, so was its accounting firm, Arthur Andersen, whose job had been to sound the alarm if its client steered into ethical danger zones. That alarm never went off. Instead, Andersen was accused of complicity in Enron’s questionable practices, even shredding documents Congress and the Justice Department would have sought. Thousands of lower-level Andersen employees – most, if not all, innocent – were laid off as the firm struggled for survival against the post-Enron loss of many of its major clients.

Hundreds, if not thousands, of lawsuits are expected from the Enron tragedy and its appendages. Under intense public pressure, moreover, Congress is expected to tighten its oversight on the way corporations operate. And the Securities and Exchange Commission is demonstrating new fervor in exercising its enforcement power as a business watchdog. The mandate to all federal regulatory agencies is almost certain to expand with the suspicion other Enrons may be waiting to explode. “The Enron debacle doesn’t mean capitalism is broken,” says a US News & World Report investigative story by Julian E. Barnes, Megan Barnett and Christopher H. Schmitt. “Nor does it fully discredit a devil-take-the-hindmost management style. Still, Enron stands as the signature scandal of the new economy, reinforcing the notion that, for all the progress made since the robber barons of the late 1800s, fair and open markets remain more an ideal than a reality.”

As with many tragedies, though, some good may result. Enron almost certainly was the catalyst for assured passage of the most sweeping campaign-finance bill in recent US history. Neither reluctant members of Congress nor the White House could, in the wake of Enron, risk killing the proposed legislation that tightens the spigot on corporate contributions. The public and media outcry has also doubtless caused many people in business to examine their own performance standards.

At least one industry leader, Charles M. Denny Jr, of Minneapolis, Minnesota, former CEO of ADC Telecommunications, has gone public with his self-examination. In an article for the Minneapolis Star & Tribune headed, “Integrity requires eternal vigilance,” Denny lays bare the questionable practices of many corporations, their executives and boards. “I raise my finger to point in righteous indignation at the culprits,” he writes, “but it bends back upon itself and points directly at me – Mr or Ms Everybusinessperson (sic) and Mr or Mrs Everycitizen. I have been convinced for years that corporate executive compensation practices are destructive to the integrity of the social contract between management and those they would lead. Yet I only emit an occasional squeak in protest.”

The way highly paid Enron executives helped themselves to additional millions as their company tumbled toward disaster triggered a tidal wave of public and Congressional indignation. That disaster has also called new attention to the widening pay gap generally between top executives and their employees. In an interview with CNN’s “Lou Dobbs Moneyline,” US Senator Carl Levin of Michigan, a leading apostle of reform, said that whereas top executives once made 20 times the average pay of their employees the ratio today is 500 times.

In his article, Denny spotlighted a common corporate phenomenon: Directors serving on multiple corporate boards: “I have also known that many corporate boards are ineffective and some are rife with conflicts of interests. Some directors serve on so many boards that, unless they possess superhuman capabilities, it is impossible for them to be sufficiently informed about the affairs of any one company … Finally, in my role as a citizen, I must hang my head in shame. The thought of federal or state regulatory agencies being staffed at the direction of those they are to oversee contradicts the very purpose of the regulatory agencies.”

Denny acknowledged the corporate clout from huge donations to political campaigns. “Enron’s political contributions were immense and widely spread,” he writes. “We are asked to suspend the use of our critical faculties and believe that our legislators are uninfluenced by large contributions to their campaigns.” But the point he made most tellingly was the urgency for those who see something wrong in business to say or do something about it, lamenting his own “history of unfulfilled good intentions …”

That’s why it is encouraging to see the localizing in Washington, DC of the annual Caux Business and Industry conferences aimed at raising ethical standards and heightening performance. Periodically young people from business and industry meet to focus on how the ethical foundations of the economy may be strengthened individually and collectively. With speakers and small discussion groups, the emphasis is on making the American economic juggernaut a more just servant of humanity. For all its strengths and grandeur, the US economy leaves millions behind and, as Enron demonstrates so dramatically, occasionally robs those at the lower rungs while showering riches on those at the top.

In his book, Beyond the Bottom Line, with its examples of exemplary business practice, Michael Smith, managing editor of For A Change, says, “Something further still is needed if industry is to fulfill its role, not just as the great provider of goods, services and jobs but also in building a more just world order. A moral and spiritual dynamic reflected in the lives of business people is required, which touches inner motivation and gives wisdom and insight into people and situations.” The secret we all need to discover is that such a dynamic and motivation offer far more rewards in inner satisfaction and fulfillment than could ever be measured in monetary terms. With that dynamic and motivation, business and industry will surely go beyond the bottom line to model the kind of world for which we all yearn and which lasting peace may require.