Don't Blame Andrew Fastow
I don't have a huge problem with the fact that former Enron CFO Andrew Fastow got only a six-year federal prison sentence yesterday for his Enron-related crimes. The deal that the feds made years ago with Fastow-- the deal that in the end netted the convictions of (the now late) Kenneth Lay and Jeffrey Skilling-- limited his prison time to ten years and when you include the two years of probation Fastow receives at the end of his six years what he got is pretty much what he, and his lawyers, and the prosecutors should have expected.
But I bet you that Bernard Ebbers has a problem with Fastow's sentence. On the very day that Handy Andy learned his fate in Houston, Ebbers, the former Worldcom executive, was entering a federal prison in Louisiana to serve a 25-year sentence for securities fraud, conspiracy and filing false documents. Did Ebbers commit crimes that were four times as bad as Fastow? Absolutely not. In fact, you could argue that their criminal conduct was quite similiar in many ways. No, the difference between Fastow and Ebbers is that the first took a deal and ratted out his buddies and the second went to trial and lost.
That's a story that is as old as plea bargaining itself. The guy who makes the deal, no matter how culpable he may be in comparison with his co-conspirators, gets a lighter sentence than the guys who roll the dice, go to trial, and lose. The inequality of this is a price that people pay for going to trial-- it is the high cost of doing business in the current criminal justice system, where the onus is placed on deals, strategic or practical, and there is a penalty for having a jury decide your fate beyond a reasonable doubt. Judges are aware of the disparities, too, but of course have no control over what deals go on in other cases.
So Ebbers recieves what amounts to a life sentence (he is sick and can't even hope to get out of prison until 2028). And Fastow will have this mostly behind him in 2012, just after the 10th anniversary of the Enron collapse. Without Fastow, Enron might not have collapsed, or at least might not have collapse as quickly or as completely. He was the hub of the wheel of fraud and deceit, the architect of those off-the-books partnerships that both lined his coffers and poisoned the company. It's not fair. But it's the way it is. And you can bet that prosecutors are delighted that future corporate defrauders are noticing how the guy who squealed got rewarded while the guy who fought got screwed.
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Posted by: Bill | September 27, 2006 01:56 PM
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