Lay, Skilling convicted in Enron collapse

Kenneth Lay, left, and Jeffrey Skilling are seen in this file photo combo. (AP Photo)

This is off Yahoo News:

HOUSTON - Former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy to commit securities and wire fraud in one of the biggest business scandals in U.S. history.

The verdict put the blame for the 2001 demise of the high-profile energy trader, once the nation's seventh-largest company, squarely on its top two executives. It came in the sixth day of deliberations following a federal criminal trial that lasted nearly four months.

Lay was also convicted of bank fraud and making false statements to banks in a separate, non-jury trial before U.S. District Judge Sim Lake related to Lay's personal banking.

The conviction was a major win for the government, serving almost as a bookend to an era that has seen prosecutors win convictions against executives from WorldCom Inc. to Adelphia Communications Corp. and homemaking maven
Martha Stewart. The public outrage over the string of corporate scandals led Congress to pass the Sarbanes-Oxley act, designed to make company executives more accountable.

Enron's demise alone took with it more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs.

Enron founder Lay was convicted Thursday on all six counts against him in the corporate trial. Former Chief Executive Skilling was convicted on 19 of the 28 counts, including one count of insider trading, and acquitted on the remaining nine.

As much as I'm happy to see that both Ken Lay and Jeff Skilling have been convicted of fraud in the wake of the Enron collapse, I fear that this is a pyrrhic victory for the government. Ken Lay and Jeff Skilling will become the scapegoats in white collar crime, where corporations will continue to control access and influence within the government through their excessive campaign donations to congressmen and presidential candidates. Now that the Enron trial is over, it will be back to business as usual. Want an example? How about Halliburton:

(CBS) When it comes to logistical help for U.S. troops in Iraq, Halliburton is the biggest game in town. Under a wartime contract that's $7 billion and growing, it's serving the needs of 200,000 troops.

But the Houston-based conglomerate once headed by Vice President Dick Cheney is neck-deep in allegations of waste and fraud involving millions of taxpayer dollars, reports CBS News Correspondent Sharyl Attkisson.

The U.S. Army is threatening to partially withhold payments to Halliburton for the logistical support the company provides for troops in Iraq. The reason: allegations of millions of dollars in over-charges for food, shelter and services.

"There was no regard for spending limits," says former employee Marie DeYoung.

Some of the most compelling accusations come from people like DeYoung, who worked for Halliburton subsidiary KBR.

She recently told Congress that while troops rough it in tents, hundreds of preferred Halliburton KBR employees reside in five-star hotels like the Kempinski in Kuwait with fruit baskets and pressed laundry delivered daily.

"It costs $110 to house one KBR employee per day at the Kempinski, while it costs the Army $1.39 per day to bunk a soldier in a leased tent," DeYoung said.

"The military requested that Halliburton move into tents, but Halliburton refused."

Documents obtained by CBS News show an auditor repeatedly flagged improper fees for soldiers' laundry. At one site, taxpayers reportedly paid $100 for each 15-pound load of wash - $1 million a month in overcharges.

Halliburton's still making billions defrauding the government, and no one within the company has been brought to justice. How about this one on Time Warner:

NEW YORK - Time Warner Inc., the worldÂ’s largest media company, is paying $300 million to settle fraud charges by the Securities and Exchange Commission for overstating online advertising revenues and the number of its Internet subscribers.

As part of the agreement announced Monday, Time Warner has restated its financial results to reduce the amount of online advertising revenues it reported by about $500 million from the fourth quarter of 2000 through 2002, the SEC said.

Time Warner will neither admit nor deny any wrongdoing under the settlement. However, it has agreed to appoint an independent examiner who will further review the companyÂ’s accounting for several previous transactions. That report, which is expected to be done within six months, could result in further restatements.

How many of these stories have we seen, where a company will pay a small fine, then neither admit or deny any wrongdoing to the SEC? It becomes a shell game for corporations, where they will engage in any activity that will excessively increase their profits. And when they're caught with their hands in the cookie jar, they pay a small fine and then go back to stealing from the cookie jar. Corporate fraud and the ensuing fines have become nothing more than a business expense to Corporate America.