Rick Cohen

Enron’s Philanthropic Misdeeds

A 9th Circuit Court of Appeals judge decided against former Enron honchos Jeff Skilling and Andy Fastow that victims of Enron's financial crimes can speak at the September 26th sentencing hearings for the two corporate felons. Unfortunately, Ken Lay's sudden and unexpected demise in July from coronary artery disease prevents former employees from conveying to the former Enron chairman just what his crimes, along with Skilling's and Fastow's, have done to their lives.

In some ways, we are all victims of Enron, those of us who had money invested in the stock market in 401k's that included Enron investments whose market values precipitously plummeted when the phantom Enron empire collapsed, those of us who have had to suffer from corporations playing the energy markets and causing brown outs and higher prices just to yield income to the Enron market traders, those of us who have had to pay through our taxes to undo much of Enron's perfidy, and more.

One way we have all had to pay is that we all supported, through our taxes, Enron's use and misuse of charity and philanthropy for purposes that were sometimes less than charitable or philanthropic. We wrote about Enron's corporate philanthropy in 2002 as "stealth philanthropy". In time for the sentencing hearings of the Enron criminals, we just published in the latest issue of Nonprofit Quarterly an extensive review of the "family" foundation activities of Lay, Skilling, Fastow, and the always interesting but unindicted Lou Pai.

There's some shocking stuff in the stories of the Enron felons' family foundations. Surprisingly, as we've noted before, the final version of Sarbanes-Oxley dropped provisions addressing corporate philanthropy and the philanthropy of key corporate executives. The lobbyists against increased disclosure for corporate philanthropy and their executives weren't corporations, it was the leadership of the nation's mainstream foundation and nonprofit trade associations, somehow thinking that the portion of legitimate corporate philanthropy foundations hand out might be sacrificed if the nation cracked down on the shadier elements of corporate giving. As the Enron trials reach their denouement, maybe the nonprofit sector will wake up to the need to pay attention to corporate philanthropy if we want to rein in the worst of corporate malefactors.

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Posted at 12:48 PM, Aug 01, 2006 in Government Accountability
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