Two years after Rick Walker wrote that e-mail, a handful of America's largest and most important financial institutions-not only J.P. Morgan but Citigroup and Merrill Lynch as well-no longer deny that they helped enable the Enron fraud. After first insisting they were victims of Enron, the three firms have more recently paid a total of $366 million in fines and promised internal reforms that would prevent them from doing the sort of deals they did with Enron. Just weeks ago three former Merrill bankers were indicted on criminal charges and escorted to court in handcuffs.
In addition, six firms-the big three plus Deutsche Bank, Barclays, and CIBC-have, bizarrely, even been sued by Enron. Under new post-bankruptcy management, the company alleges that the financial institutions conspired with former top Enron executives to cook the company's books, generating personal fortunes for the insiders and more than $500 million in revenues for the banks. The Enron estate is seeking billions of dollars in damages. A shareholder lawsuit led by feared plaintiffs attorney Bill Lerach is seeking additional billions from the banks.
Bad business practices always catch up with you. It may seem like it is in your self-interest to rip people off, but if they find out, it is in their self-interest to turn you in. That is why, counterintuitive as it may be, a certain amount of reciprocal altruism can actually be in your best interest. I hope Enron becomes a standard b-school case study of how a corporate culture that pushes the limits of the law can ultimately result in the demise of the company.