The Enron story isn’t over. Jeffrey Skilling and Ken Lay, two former leaders of the disgraced energy firm, will surely appeal the guilty verdicts handed down today. Perhaps more importantly, their legacy lives on in the regulatory reforms passed after the corporate scandals of 2001 and 2002.
But Harvey Pitt, who chaired the Securities and Exchange Commission while Enron unraveled and now leads consulting firm Kalorama Partners, says anyone concerned with corporate governance should still sleep with one eye open. While he thinks the conviction will stand up on appeal, new Enrons are just around the corner, waiting quietly for the right moment to pounce. Options backdating, Pitt says, will cause the next big corporate scandal.
Forbes.com spoke to Pitt about the trial, the verdict and the eternal problem of corporate greed.
Forbes.com: Did anything surprise you about the verdict?
Pitt: Not really. It’s obvious the jury was very thoughtful and very careful. With respect to Skilling, for example, they acquitted on nine counts of insider trading and only found him guilty of one. I think that makes the case even harder to overturn on appeal because it shows the jury understood the different counts, and they were thoughtful and careful in going through them.
Were you surprised that Lay’s lawyers didn’t ask the judge for a new trial once the lead attorney became sick?
Yes. It was an opportunity to defer the trial and separate Lay from Skilling, and I think they made a calculated misjudgment in not seeking to have the cases severed.
Why should Lay’s attorneys have severed his case from Skilling’s?
Skilling had 28 counts against him, and most people thought he really bore much of the responsibility. Of course, everything that Skilling does in a trial like that spills over onto Lay. For Lay to have had at least the possibility of going to trial separately is something that many criminal defendants would seek to exploit if they could.