If 52 per cent of the staff of a company were found to have cheated their customers it would be fair to say that firm was a criminal enterprise, a racket. Only a small percentage of Enron’s staff was crooked, yet the whole company was closed down by the authorities.
You see, the thing is, Enron wasn\’t closed down by the authorities.
It was closed down by the markets. It went bankrupt.
As the accounting scandals came to light the share price dropped precipitously. This made lenders wary of rolling over debt (yes, Enron used to borrow short to invest long) and thus the cashflow dried up and they went bust.
In fact, the markets bankrupted the company before a single bureaucrat had even managed to sharpen their pencil.
The bit the bureaucrats did do was get Arthur Anderson convicted and thus bankrupt that firm. Slightly sadly, as three years later Anderson\’s was cleared of those offences on appeal and yet the firm was already dead and buried.
Sure, prosecutions followed but the company was long gone by that time.
As a good little libertarian Guido really ought to know all of this. Markets punish better and faster than bureaucracies and Enron is one of the great examples of exactly that.
Tsk, and to mislead in The Times so as well…..