The New Mexico Texas Philosophical Society recently held their annual conference. Below is a response I have to a paper by Dr. Robert Tierney (University of Houston) on “Corporate Action and Indexical Incoherence”
Enron, Art, and Corporate Responsibility
Dr. Tierney addresses in the introduction to his paper, corporate intentionality can take two strategies: intent can be constituted by a human being and a corporation OR the intention of a person / people can be imputed onto a corporation. To prepare this response, I had a criminal attorney read this paper and I spoke with him afterwards about corporate intentionality. The lawyer I consulted said that intentionality is really a technicality. From a legal point of view, corporate criminal liability was created to serve two purposes: pay fines and pay damages. Simply put, even though people are ultimately the cause of negligence, if something goes wrong, individual people cannot afford to pay the damages that arise. Corporations can.
It is pretty obvious to most that companies and people are inexorably though ambiguously linked. I represent my law firm, for example, and to some extent, my law firm reflects who I am. But in response to this paper, I would like to look at and contextualize two issues that Dr. Tierney and my legal colleague do not address. First, what does it look like if a corporation and human beings, to some extent, merge? Second, what does it look like when a person becomes a company? because I believe that these are the existential questions at the heart of Dr. Tierney’s project. Since we are in Houston, I thought I would do this by talking about Enron, an appropriate choice since we are in Houston, the setting of its scandal.
When it was discovered that Enron had fraudulently reported gains and moved losses to other entities in order to increase the stock value, that Arthur Anderson had assisted them, that thousands of Enron employees were going to lose their jobs and millions of dollars were going to evaporate, it was clear that someone was going to have to pay. Despite Ken Lay (Enron, Founder and Chairman) and Jeff Skilling’s (Enron, CEO) vast wealth, their fortunes were not sufficient to cover all the damage that Enron had done. Legally, Enron, the corporation, the “person” was going to be held liable because that was the only option.
So, how does a company become a person?
Though an imaginary entity cannot be a person, it can assume a kind of tangible reality that points to its character and intent, or what marketing professionals would call corporate culture and branding. Perhaps a company becomes a kind of person through its brand and how it is manifested. One way to look at Enron’s brand would be through its architecture and art projects developed in conjunction with the expansion of their campus in Downtown Houston.
Enron’s new corporate office building was designed by Cesar Pelli and was completed in 2003. It sits at 1500 Louisiana and has 40 floors totaling almost 1.3 million SF.
Working with the Museum of Fine Arts Houston and the Contemporary Art Museum, Lea Fastow (wife of the Chief Financial Officer) began amassing an impressive contemporary art collection to be housed in the new building. The collection included works by Donald Judd and Claes Oldenburg. A work that Fastow aspired to was an installation by Olafur Eliasson that would connect the existing headquarters and the new building. This purchase would have been prescient given that the same year Enron went bankrupt, Eliasson’s “Weather Project” at the Tate Modern in London launched him into international art stardom. Enron aspired to be the new Menil, the collection owned by Schlumberger heiress Dominique de Menil. (The Menil exhibited a series of Eliasson photographs 4 years later.)
The combination of architecture and art would have illustrated Enron’s brand of innovation and excellence. These two would have been the objective manifestation of its character. If Enron was a person, then walking through the new building at 1500 Louisiana would be like walking through its house, meeting the people who live there, and looking at the art that would give insight into their personality.
How does a person differentiate herself from a company?
When I think of Enron, I think of all the employees. Some invested all their money into Enron, thinking that there was no ceiling to its value. When Enron failed, they were left virtually homeless. Some could transfer their skills to other companies, despite the Enron stigma but not all. Suffering Enron employees permeated the press and I remember seeing photos of people crying and spitting on Senior Executives. But, in addition to their losses, the contributions that the Enron employees made to its destruction should not be overlooked. That is, if a corporation is comprised of people, and the corporation dies, how were the employees responsible for its death?
Working at Enron was fierce. Employees force ranked each other, the lowest ones being sacked quarterly. The idea was to keep the best and brightest. Creativity and innovation would yield more profits and the fewer the people who could make that happen, the more money to go around. The team stayed relatively lean, and the wealth of employees skyrocketed. Enron employees became ambassadors of the brand. Luxurious homes were purchased in the Old Money River Oaks neighborhood. Modern condos were purchased in newly designed towers, like the one still standing on Kirby. Enron money influenced Enron lifestyles. Enron employees were friends with other Enron employees. It was an exclusive, incredibly wealthy club.
But it was eventually the people who got voted off the Enron Island that won in the end, the people who lost their jobs but cashed in on their stocks before the price plummeted. These people were the first who had to consider how to separate themselves from their identity as an Enron employee. But this was not the case for Cliff Baxter, the Chief Strategy Officer.
Before the scandal broke, Baxter, a close friend of Jeff Skilling’s, had warned that Enron was in trouble because its financial practices were shady. He knew that the end was coming, and so he sold off $30 million of his Enron stakes in 2001, six months prior to bankruptcy. He was later personally sued. One year later, Baxter was subpoenaed and asked to testify before Congress. He agreed but before he appeared, he shot himself in the head while sitting in the driver’s seat of his Mercedes Benz. He left a suicide note addressed to his wife that said, “Carol, I am so sorry for this. I feel I just can’t go on. I have always tried to do the right thing but where there was once great pride now it’s gone. I love you and the children so much. I just can’t be any good to you or myself. The pain is overwhelming. Please try to forgive me. Cliff.”
Cliff did not sign his name to the note – it was typed – and so, despite a history of mental instability, there were some rumors that he had been murdered. A murder that could be blamed on a villain was easier to swallow than the truth: one man, amongst others, had collectively ruined a company, its employees, and himself.
Baxter and the other Enron employees raise the question of: what happens when a person becomes a collective that then forms a company and that then fails? Are all the people, then, failures? But more importantly in the case of Enron, did they fail as employees and their responsibility to the corporation or did they fail as individual moral agents?
For many Enron employees, their actions as individuals were blurred to such a degree that fiscal and personal responsibility were intertwined and indistinguishable. Baxter’s dramatic suicide epitomizes this. To my mind, he could not see the distinction between his success at Enron and his ability to be a husband and father. He could not determine if he had acted to the benefit of the company or to himself and so, in the most existential manner possible, he committed suicide.
All these things being said, I would like to point out that both Dr. Tierney and my lawyer colleague are right. Practically, the distinction between corporate and individual intent for Enron didn’t matter in the end because, the victims were seeking monetary damages, not apologies. Philosophically, it is important to understand how these ideas intertwine because we struggle with dueling identities and responsibilities every day and that struggle determines the intention we bring to our actions. My analysis lies somewhere between. I believe that we have a desire to be successful – both professionally and financially. We want to take care of our families to the best of our ability. If we have to work all day long, we want to feel like we are contributing to the objectives of our companies as both a member of a collective workforce and as an individual person who brings specific skills and particular point of view.
Companies that are successful are those that have a reflective and sustainable corporate culture – where the company takes on the persona of its employees. Employees are successful when feel invested, when they take pride in what the company accomplishes and they are financially rewarded. The failure of Enron illustrates the failure of both.
Enron, the company as a “person,” died. The company never occupied the building on Louisiana; a New York investor bought it for $103 million. The beginning of the Enron Art Collection was sold at auction for just at $1 million. In 2003, during the bankruptcy, I went on a tour of the empty building with the University of Houston’s Architecture School. I stood in Ken Lay’s office and stepped out onto the patio where he would have peered out over Houston, surveying what he thought was going to be the Enron Empire. When I walked through the building, anguish oozed through the walls. The livelihoods of thousands of Enron employees, their retirement, their children’s college funds were like ghosts hanging in the dank, unoccupied air. There was no art hanging on the walls or standing in the hallways. The building was vast, empty, and sad. It was like being at a cemetery.
Enron as an entity comprised of individuals died as well. This can be seen literally in the case of Baxter, but as Enron’s actions were revealed in the media and court cases, the people who worked there were faced with their contribution to its demise, as well.
I find that it is virtually impossible to make a distinction, between our identity as a person and as an employee. Our livelihood and happiness depend upon it, to some degree. And yet, personal responsibility as a collective or individual, as a corporation or an employee, cannot be disregarded. When bad things happen, someone or something must make amends. How to do this ethically is the question to wrestle with. And as Houstonians drive through Downtown, Enron tower, now occupied, stands awkwardly in the Houston skyline, reminding us of who we have been so we might not do it again.