What Enron and the IRS Have in Common

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WSJ:

 

Ethical meltdowns are rarely the work of a few rogue workers. They take their cues from toxic leadership.

STEVEN LAW

6/5/13

 

Any good CEO will tell you that ethical meltdowns like the IRS political-targeting scandal are rarely the work of a few rogue employees. Such messes are the result of a toxic culture that has been allowed to fester.

 

When I was chief of staff at the Labor Department, we investigated the ethical and financial disintegration of Enron in connection with the collapse of its pension funds in 2001. What we found was a small circle of certifiably bad actors who acted without regard for the law or for anyone else. Surrounding this inner circle was a culture that gave these employees tacit permission to run roughshod over others and break the law.

 

While lower-level Enron employees did their jobs honorably, senior management cultivated a malignant esprit de corps that corroded the company's ethics. The C-Suite view was that no one was smarter, faster or more aggressive than these executives. Mortals couldn't possibly understand what they did. That belief created its own closed-system logic, leading to deceptive accounting schemes, self-dealing and, ultimately, a battery of criminal convictions for Enron's top brass.

 

What does Enron's collapse have to tell us about the shocking revelations of IRS political targeting?

 

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What the Enron scandal teaches is that such implicit permission can be communicated by a toxic culture fostered by the company's top brass.

 

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