Wilful Blindness Series Part 3: Enron
American energy giant Enron was one of the brightest stars of the 1990s but by late 2001 it had imploded into a black hole, with an accounting scandal that also brought down its auditor, Arthur Andersen.
Did no-one see this coming? Were there signs of the company’s impending downfall? What can today’s trustees learn from this? In this article we will look into these questions.
In the trial that followed the scandal, Kenneth Lay, the CEO and Jeffrey Skilling, the brains behind the accounting setup, claimed that they did not know what was going on. When instructing the jury, Judge Simeon Lake laid out the legal concept of wilful blindness. The bottom line is that ignorance is no excuse; as leader you are still responsible.
But let’s start from the beginning to learn what happened.