Tuesday, June 13, 2006

Why the Enron Verdict Is Dangerous

Jeff Skilling's lawyer, the estimable Daniel Petrocelli, offered on CNBC a spirited argument as to why the verdict in the Enron case is a dangerous example of the criminalization of business behavior after the fact and with the benefit of hindsight. For what its worth, I think Petrocelli is right (HT: WSJ's Law Blog): "I think it was a bad day for the country. A great injustice was done on that day. And it has nothing to do with whether you believe Jeff Skilling is guilty or innocent. But to use the criminal justice system as a means of regulating business conduct is wrong in a case like this where business transactions, business judgments were being questioned. Nobody stole money in this case, nobody swindled anybody, there was no Ponzi scheme, there was no fraud in the sense that the law generally recognizes. What the government was doing was after the fact, simply because Enron went into bankruptcy, challenging transactions that were fully approved by senior management, fully approved by the board of directors, fully approved by lawyers and accountants and scores of other people and after the fact challenging the wisdom of some of those decisions. Well you can do so in SEC proceedings, you can do so in civil cases, you ought not to use the criminal justice system to do so. And I think it sends a very dangerous message to business and to people at large to know that their government can misuse and abuse the laws and the systems of justice of the country for political purposes. And I think that�s what we saw in this case. This was a public lynching to satisfy a heated appetite for retribution because of practices that went on during the late 90s that after the fact now people aren�t happy about. It�s one thing to challenge those things in civil cases; it�s wrong to do so in criminal cases and I feel like ultimately the laws need to be revisited to prevent this from happening again."

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