Principled Profit: The Good Business Blog

Musings on the world-wide movement for ethical business, frugal marketing, and how honesty, integrity, and quality combine with deep relationship building to create business success. By the originator of the Ethical Business Pledge campaign and award-winning author of Principled Profit: Marketing That Puts People First and five other books

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Wednesday, June 15, 2005

What do Michael Jackson and Arthur Andersen Have in Common?

On the surface, a flamboyant pop star has little to do with an accounting firm: the epitome of corporate conservatism.

But the accounting firm we're talking about is Arthur Andersen, and the way its auditors let Enron's top execs bring down both companies hardly fits my standard of fiscal conservatism.

Anyway, the comparison isn't about lifestyle or philosophy. It's about the notion that being cleared in a court of law doesn't necessarily mean you're actually innocent.

Michael Jackson was not found guilty. He may or may not have molested children--I don't have the knowledge to say, one way or the other. He certainly used bad judgment to share his bed with them--but the jury's decision rested not on whether or not he committed the act, but whether the government had proven its case beyond reasonable doubt. Given the lack of credibility of one of the prosecution's chief witnesses, the jury found that the government had not put forth an ironclad case.

And the Supreme Court, late last month, found not that Arthur Andersen wasn't culpable for its destruction of documents, but that the judge had given faulty instructions to the jury, and thus the guilty verdict was thrown out.

Lawyers for both Michael Jackson and Arthur Andersen were quick to hail the court decisions as clearing their clients' names, and Enron CEO Jeffrey Skilling's lawyer quickly made the claim that his client's case was strengthened. But the Andersen jury foreman, Oscar Criner, called the Supreme Court's ruling "a grave error" (as reported in Enron's hometown paper, the Houston Chronicle: )

But in fact, neither decision addressed the defendant's guilt or innocence. All that has happened is that a jury in one case and a panel of judges in the other found that the government did not make a strong enough case for wrongful intent.

Arthur Andersen first allowed Enron's highly questionable accounting practices and then, as the SEC was preparing to investigate, destroyed the documents about the case. Michael Jackson shared his bed with teenage boys. While they were not guilty in the eyes of the law, the ethical questions remain in both cases. Failing to find that an action is criminal is not the same thing as finding that a defendant acted with ethics, with honor, and with good intent. It merely shows that the standard of proof was not met.

Legality and ethics are not always the same. Let's keep that in mind as the Enron trials proceed.


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