As Bankers Become Villains, Skilling Ponders Jailbreak

Among book authors, publication dates often represent numbers on a wheel of fortune. For authors, present-day news headlines can help or hinder a book's liftoff.

And so it is with Innovation Corrupted: The Origins and Legacy of Enron's Collapse (Harvard University Press 2008), a thoughtful, in-depth study of the corrupt energy trader. The book's author, Harvard Business School professor Malcolm S. Salter, has been traveling the press circuit lately trying to gain some ink for a text that will reside on a shelf already crowded with Enron tell-alls. However, publishing's wheel of fortune appears to have been kind to Salter, whose book arrived in stores the very week that press reports surfaced that Jeffrey Skilling could soon be set free.

How could this be? Nineteen felony counts of fraud, conspiracy, insider training: The feds had Jeff Skilling dead to rights.

Well, maybe, but Salter's book carefully details the external layers of corruption that empowered the company's leadership to become actively involved in what he calls "gaming the system." Among such participants, Salter saves perhaps his harshest criticism for Enron's colluding bankers.

"Enron's bankers not only understood their client's unprincipled motives and tended to resolve conflicts of interest in favor of self-serving gain, but also found ways to ignore their own control and risk management systems," he writes. Ultimately, Salter explains, five of Enron's banking partners would agree to pay shareholders, the SEC, and Enron itself a total of nearly $8.7 billion in legal settlements related to the collapse.

However, none of the banks admitted guilt.

After several months of headlines that have exposed the routine manipulation and disregard of sound risk management systems within the banking industry, Skilling increasingly appears as just one more eager player at a rigged table. It's been characterized as the greatest financial upheaval since the Great Depression, and while Treasury Secretary Hank Paulson is proposing a change in financial regulations, you can't help but wonder whether the collapse of Enron was an early warning flare for today's troubled banking system.

While Salter's book in no way defends Skilling (in fact, far from it), the timing of its arrival may possibly boost Skilling's case to have his conviction reversed. Or, at the very least, to grant him an extra ounce of sympathy in the public eye.