Time hasn’t diminished the Enron effect

Even as the corporation’s former chairman and chief executive were being
convicted last Thursday on 25 charges of fraud and conspiracy relating to
Enron’s collapse, the refrain was being uttered again about the avalanche of
regulation costing business millions to implement.

That is unlikely to go away entirely even as the lobbying to tone down the
Sarbanes-Oxley Act begins to gather momentum and increased support.

Even if regulation was reduced, the business world is not what it was. The
failure of business ethics among the executives at Enron has damaged the public
view of businessmen to the extent that will take years to recover. Last week’s
verdicts will only lengthen that process.

And there are still issues in the UK to resolve. A month ago, a DTI review
concluded that we do not have enough big audit firms to ensure the right level
of competition. That view has, quite shockingly, taken five years to emerge from
the event that caused the predicament – the demise of Andersen, dragged down as
Enron went under.

We are also still wrangling over auditors’ liabilities and whether they
should face criminal prosecution if they knowingly produce misleading audit
reports. That’s bundled up in the company law reform bill, which has taken six
years to reach its current unresolved stage.

At this pace it’s difficult to imagine when we will finally draw a line under
Enron. What’s clear is that there were lessons about transparency and
accountability that shouldn’t be forgotten.

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