Another CEO Indicted

Richard Scrushy, former CEO of HealthSouth has been indicted by the feds on 85 criminal counts for stock manipulation, conspiracy, money laundering, and wire fraud. The government is seeking more than $278 million in forfeitures from Scrushy. If convicted, Scrushy could face up to 650 years in prison and $36 million in fines. I think this case is even worse than Ken Lay's Enron mess.

I don't know either man personally and have never had any contact with either of them. However, from all I have read and heard about them, Ken Lay comes off as a detached, strategic thinker who often left the execution and details to subordinates. His claim of innocence of "I didn't know what the people below me were doing", while certainly no excuse, is almost believable. On the other hand, Scrushy had a reputation for personally being involved in, and controlling, every detail. For him to make Lay's claim of "I didn't know what the people below me were doing" seems laughable.

Personally I find the "I didn't know what the people below me were doing" claim from an executive offensive. You are getting paid to manage the operation. If you don't know what the people below you are doing, how do you know if what they are doing is right for the company? If you don't know what they are doing, how do you know if they are doing what you tasked them to do? If you don't know what a subordinate is doing, find out. That's part of your job. If you can't find out, you obviously aren't doing, and can't do, your job.

Scrushy is something of a local legend in Birmingham, Alabama, where HealthSouth had its headquarters. Signs of his philanthropy can be seem all over town in the places that bear his name. Until the revelations of his alleged financial shenanigans surfaced, Scrushy was respected and almost revered in Birmingham. Will the common people who lost life savings in HealthSouth's stock collapse, many living in Birmingham, turn on him or will his history of philanthropy and corporate generosity effect a local jury?

There are good, honest CEOs in business. Why do they allow this continuing parade of crooks in the executive suite? Surely they see the damage it does to their own reputations by association. Why don't the honest CEOs step up and demand enforceable measures to put the crooks in jail for a long time?

Lessons Learned From Enron
Business Ethics
Insider Trading
CEOs Are Overpaid
SEC Subpoenas Ken Lay Enron Documents