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Nearly five years after the Enron story broke, a Houston jury has convicted former Enron Chairman Kenneth Lay and former Chief Executive Officer Jeffrey Skilling of fraud and conspiracy. Now that the verdict is in, it’s worth remembering that it didn’t have to be this way. Way before the criminal allegations were filed, back in the late summer of 2001, Lay and Skilling made the decision to stonewall reporters who were asking legitimate questions about Enron’s off-balance sheet entities and accounting practices. That decision-and not the prosecution and conviction of these two men-is largely to blame for the current rush-to-judgment culture that is now the legacy of what happened at Enron. Whether the company could have been saved in the long run is unknown. That Lay and Skilling violated every known rule of Crisis Management 101 and made matters worse cannot be denied. What they succeeded in doing is replacing Exxon’s mishandling of the Valdez oil spill crisis as every crisis manager’s nominee for the worst case to date of crisis mismanagement. Lay and Skilling’s defense was premised partly upon the idea that it was a torrent of negative publicity that led a panicky market to a selloff and a loss of the indispensable credit markets they needed under their business model. This negative media, they argued, ultimately forced Enron to seek bankruptcy protection in late 2001. Experience has shown that the way to mitigate the negative spiral of a media crisis is through transparency and accountability, and often that must start with the press. Had Lay picked up the phone back in September 2001 and listened to questions from reporters who knew bits and pieces of what was going wrong at Enron, he might have at least been able to stem the hemorrhage of damaging media stories that were far worse (and somewhat more inaccurate) than they needed to be. Lay said it himself on his second day of testimony. It was “against every bone in my body” not to respond to questions from the Wall Street Journal about irregular Enron transactions in 2001. “My policy had always been it’s better to talk to the press than not talk to the press. At least try to get your viewpoint across and let them at least consider it,” Lay testified. Would talking to the press have changed the facts? No. But what Lay might have changed were the facts that occurred after that first phone call from the Wall Street Journal. The Kenneth Lay of pre-downfall Enron was one of the most successful energy executives in the country, head of a company valued at $60 billion and a man with the ear of the president of the United States. If what he claims is true, and he did not know about the fraud being perpetrated by those working for him, calls from reporters would have given him the wakeup call he needed and, potentially, the opportunity to show he could fix the problem. What Lay should have done Specifically, Lay should have taken reporters’ calls, listened carefully and then asked for a few days to look into the allegations and find out what was happening so he could provide an informed response. Then, Lay should have sought out the facts and in doing so, likely would have recognized the scope of criminal behavior being committed on his watch. He should have then notified the board, appointed an independent firm to conduct an investigation and gone to the U.S. Securities and Exchange Commission and to the U.S. attorney’s office. Such action would have spoken volumes: Enron wants to get to the bottom of what happened, even if it was criminal. Even if Lay was involved, this conduct would have certainly helped to mitigate the prosecutor’s decision to prosecute and the penalty to be assessed. Armed with the facts and with his counsel’s advice, Lay could have returned the reporters’ calls, detailed what facts he knew, identified one or two good facts on his side and focused on everything he’d done to make things right. Instead, Lay and his trusted public relations team battened down Enron’s hatches and buried the company, thereby providing crisis-communications managers with a perfect model for what not to do. Unfortunately, by the time Lay and Skilling got themselves high-quality defense attorneys who allowed them to go public in a series of selected media interviews, it was just too late. That first crucial step toward transparency and accountability-telling the truth early, telling it all and telling it yourself-had long since passed. And so today, in Houston, Lay and Skilling face prison sentences as lengthy as 25 years. Regardless of whether you agree with the jury’s verdict, it’s difficult to deny Lay and Skilling are guilty of gross mismanagement of a legal and media crisis and an extremely short-sighted refusal to be transparent. Lanny J. Davis, former special counsel to President Clinton from 1996 to 1998, heads the legal crisis communications practice group at Orrick, Herrington & Sutcliffe, in the Washington office. Caroline S. Nolan is an associate in that practice group and is a former legal producer at CNN and MSNBC.

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