The public’s anger and sense of betrayal following a string of collapsed U.S. businesses is likely to spur a wave of regulation unlike any since after the 1929 stock market crash, Enron Corp.’s chief executive says.
“We continue to prove we can’t govern ourselves effectively,” said Stephen Cooper, a turnaround specialist hired by Enron in January as its interim chief executive officer. “I think we’ll see a lot of changes coming out of Congress and the regulatory agencies” to prevent corrupt business leaders from padding their pockets first and bailing out on investors and employees.
Cooper was a keynote speaker Thursday at a leadership conference at Duke University’s business school.
The program also featured musings on leadership by General Motors Corp. CEO Richard Wagoner Jr., Southern Christian Leadership Conference President Martin Luther King III, and Duke men’s basketball coach Mike Krzyzewski.
Cooper, 55, is managing partner of New York-based restructuring firm Zolfo Cooper LLC. The firm’s previous clients include Sunbeam Corp. and Federated Department Stores Inc.
He plans to rebuild Enron as a smaller and more conventional energy company that owns gas pipelines and power generating companies and avoids the power trading business which Enron developed and turned into its most profitable unit.
Cooper declined to answer when asked whether he had seen evidence of fraud since joining Enron. He also said he would not comment on the plea agreement formalized Wednesday with Michael J. Kopper, a top aide to former Enron financial officer Andrew S. Fastow.
Kopper pleaded guilty to one count of conspiracy to commit wire fraud and one money-laundering charge. He agreed to give up dlrs 12 million in illegal profits and cooperate in the government’s criminal probe of Enron’s collapse.
Cooper blamed the collapse of big companies first on CEOs who came to see themselves as stars entitled to whopping salaries no matter whether the company made money. Kenneth Lay, who preceded Cooper as Enron’s chairman and chief executive officer, was one of a number of top executives who took hundreds of millions of dollars out of their failing companies.
“Those shareholders were left holding the bag,” Cooper said.
Turnarounds generally follow the same pattern, Cooper said: a clean sweep of top managers, battlefield promotions for junior executives into top positions, money-losing or marginal products or divisions lopped away, centralized control over finances to hold onto cash, and frequent communication with employees to keep the best ones from leaving.
“People can deal with bad news,” he said. “They can’t deal with no news.”
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