Enron Aftermath

It used to be that corporate criminals were treated differently than those who robbed banks. No more. As the Enron case proved, not only is no one above the law, but those accused of white collar crime can now expect to literally face the public while facing charges.

The increase in white collar crimes that are prosecuted has occurred in an new environment where business reporters are more aggressive than ever in getting to the bottom of corporate scandals. In the old days, a CEO, CFO, and general counsel might have gotten away with "no comment" or "we'll try our case in court" because the media wasn't always paying that close attention to how companies operated behind the scenes. Companies were also less inclined to offer details before Sarbanes-Oxley and other legislation took effect.

But it's a new ballgame. Smart companies know that they must engage the public when facing a crisis if they want to survive. And CEO's, often the public face of a company as Ken Lay was to Enron, also know that they must engage the public through the media through thick and thin. Lay even  launched a website in an attempt to defend his reputation while on trial. Normally, that is not a bad idea, but the public can not be swayed by websites or blogs or press statements if the proscecutors have mounds of evidence that points to unethical and/or illegal behavior.

We might not have seen Lay and Skilling convicted had it not been for aggressive business reporters, who in the past might have turned a blind eye to or didn't care enough about corporate wrongdoing. But in recent years, our nation's top business journalists have caught up with the Woodward and Bernsteins of the world. In other words, while Americans have always looked to their newspapers for details of government scandals, now readers count on business journalists to ask tough questions of board members, CEOs, chief financial officers and other corporate leaders. As a result, the public (and juries) are much more knowledgable about complex issues such as accounting irregularities, securies fraud, and massive tax evasion.

The Enron case showed that even a well-funded legal defense can't sway jurors who might have  already read about the many people who lost their life's savings as a result of Enron's business practices and simple greed.

That's why it's more important than ever for companies --and the lawyers who advise them -- to engage the media consistently long before there is a crisis such as a criminal investigation.

Every company is different and with various story lines, but corporate PR staff and their agencies should seek to place stories that leave readers with the following impressions, which can only help maintain a reputation if a crisis hits:

1--The company cares about every community that it does business in.

2--The company has a diverse culture and doesn't tolerate screamers, abusive behavior, harassment or discrimination of any kind.

3--The company plays by the rules (SEC, IRS, EEOC, etc.)

4--Employee policies are fair and benefits are at least slightly better than the nearest competitor.

5--Executive compensation is adjusted to reflect the rise and fall of the company's stock (see the recent uproar at Home Depot).

6--The company's customer service line actually has live people working the phones, and not just in India.

7--The company strictly protects customer data from the prying eyes of criminals and governments who say, but can't prove, that they will use the data to fight terrorism.

8--The company sticks by its mission statement and doesn't sell out to foreign governments who either have abyssmal human rights records or who have supplied weapons to terrorists and/or enemies of the U.S.

9--The company makes safe products with proper warnings and removes products immediatley when it learns that one of its products might have caused injury or death.

10--The company doesn't overpromise results or participate in false advertising.

Favorable stories about a company in the local and national media can help during most crisis situations. But when a company simultaneously spits in the eyes of its employees, its shareholders, the government, the business comminity, its friends throughout a city (e.g. Enron and the City of Houston), there is little PR people can do at that point to save the ship from sinking.