Posted by Dan Ewert : 3/25/2002 01:48:00 AM (Archive Link)
One of the interesting things I've noticed about this whole Enron thing is the apparent dichotomy between how Enron was treated and Arthur Andersen is being treated. When Enron went under due to the willfully unethical acts of a few tops executives, putting many people out of work, the public cried for those newly unemployed. Yes, it was a sad thing indeed. These workers in a large energy concern that was really only a recent creation and had a wacky business plan at best were now without a job. We said, “It isn’t fair! This wasn’t their fault!” Jesse Jackson and Al Sharpton even chased the headlines down to Houston where they demanded the government make special welfare available to the unfortunate souls (of course, after their photo ops, they promptly evaporated from the scene).

In the case of Arthur Andersen, they may go bankrupt because of the negligently stupid actions of a few people in their Houston office. However, nobody seems concerned about the 28,000 employees who may be put out on the street all over the country if the firm goes under. Rather, the public wants blood. They want to see the Andersen charged with all sorts of heinous offenses. They want to see an almost 90-year-old (and until recently, well-respected) accounting institution torn to shreds. I really find it quite amazing on several points.

First, people seem to be more willing to excuse Enron’s actions than they are Andersen’s. Enron conceived and executed the plans that led to its downfall. Andersen was supposed to be Enron’s overseer to make sure everything was above board and apparently through either knowing complicity or professional blunder, Enron’s actions were not condemned. But let’s make no bones about it: Enron did them. The blame for the bankruptcy lies with them. Yes, you can blame Andersen for not doing its job, but I don’t see how you can heap so much more persecution upon them than on Enron. Society seems to like looking for somebody else to make responsible for another’s actions. We like to make a victim out of the criminal. So this is what we are doing with Enron. Its accounting sins are the fault of Andersen’s bad oversight. Poor, poor Enron would never have hidden all that debt in those shell corporations had Andersen raised it right with firm discipline and said, “Bad Enron! Bad!” You can blame Andersen for not performing its duties to the extent it was supposed to but don’t you dare blame it for what Enron actually did.

Second, Andersen is being made out to be a backwards firm that engages in all sorts of accounting shenanigans. Rather, it’s being made out to be the only backwards that engages in all sorts of accounting shenanigans. Of course, that’s not true… it’s not backwards and 99.9% of its dealings involve no shenanigans. From my reading and point of view, it seemed to suffer from certain policies and practices that were driven by the competitive and profit-driven industry more than anything else. What I find strange is the evil public eye being cast upon Andersen while ignoring the other four “Big Five” firms. Make not mistake, whatever Andersen was doing wrong, you can be sure the others were or are doing as well. They just weren’t exposed in the way Andersen was and I’m sure they’re more than happy to let Andersen take the heat while they quietly (very quietly) make changes in their own organizations to prevent similar problems, or at least similar exposés. They’re probably drooling over the clients they can gain should Andersen dissolve, not to mention the amazing abundance of talent that would suddenly be on the market. I think some news agencies would have one or two hot stories on their hands if they stopped concentrating on Andersen so much and looked at suspicious practices and client-dealings at the other accounting firms. Of course, that would take effort and much newsgathering nowadays abhors effort. It prefers the news that’s ready-made and investigative reporting that doesn’t go beyond a human-interest story the public will lap up on a prime time newsmagazine show. And besides, something that would involve the expertise (from experts, not pundits or talking heads) needed to investigate accounting practices elsewhere would only be for the intrepid and patient few.

Third, I think this perfectly illustrates the public’s obsession for things that it clearly doesn’t understand. I’m indicting myself with this. I’m not business or accounting minded. While I grasp the pared down “Enron Bankruptcy For Dummies” version of events, I would never (at least at my current level of education) understand the details of what happened. And my own dealings in business show that there are tons of little behind the scenes details, conversations, and decisions that affect what happens and we’ll never know about. So while I can put my two cents in, I can take some pride in admitting that I don’t fully know what’s going on. Ahhh… the Socratic spirit within me lives again.