As CEOs are handcuffed, ethics may not be

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“You have to ask yourself, what were they thinking? Falsified documents? Forgeries? Secret slush funds? Fictitious employees? Lying to the auditors? There's something very wrong here,” Thomsen said about options backdating in October at a Stanford University conference on corporate governance.

So far, the agency has taken action against two companies for options backdating — one of which prompted a dramatic flight from justice by Comverse CEO Kobi Alexander, who eventually appeared in Namibia and is currently fighting extradition to the U.S.

Thomsen says she expects only a fraction of the 100-plus cases the SEC is currently investigating to lead to convictions or jail time. “We are focusing on the worst conduct.”

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Yet as these corporate bosses watch the disgraced CEOs of late 1990s accounting scandals being carted off to jail — from Skilling and Ebbers, to Tyco's Dennis Kozlowski and Mark Swartz, Computer Associates International's Sanjay Kumar, Adelphia's John and Timothy Rigas, Daewoo founder Kim Woo-choong, Dynegy's Jamie Olis, among others — has the stricter regulatory environment of recent years had any impact at all?

Thomsen believes it has. “I am gratified to see that we have learned something from Enron and all that followed, particularly the enactment of the Sarbanes-Oxley Act, insofar as it has highlighted the critical importance of corporate government,” she says.

Frank Vogl, president of Vogl Communications, the Washington-based publisher of ethicsworld.org, says American corporate ethics are actually far “better than their reputation.”

He cites a 2005 National Business Ethics survey showing a steady rise in employee-perceived corporate integrity standards today compared with 20 years ago, with U.S. companies pursuing more environmental programs, taking greater account of human rights, labor and discrimination issues in the workplace, and putting more resources into ethics codes and standards.

“However, many of these achievements are overshadowed by the headlines about corporate fraud, CEO crime, greed, and lying, as well as record fines for wrongdoing,” Vogl said in a keynote speech at the 2006 International Business Ethics Conference in Seattle last summer.

As he awaits jail, Skilling is currently under house arrest and fitted with an electronic-monitoring device. Under terms negotiated by lawyers representing former Enron employees, his personal savings of about $60 million will be liquidated and divided up within a restitution fund for victims of the company's collapse, on top of $15 million in legal fees.

Skilling will be able to take a year off his 24-year sentence by attending alcohol and mental-health counseling, plus up to 54 days for good behavior.

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