Business World

Thursday 23 January 2020

Ex-CFO who helped sink Enron offers ethics lesson

Loophole: Andy Fastow addressed the Pendulum Summit 2020 in Dublin
Loophole: Andy Fastow addressed the Pendulum Summit 2020 in Dublin

Shawn Pogatchnik

COMPANIES usually wreck their reputations by exploiting rules not by breaking them, Enron's former chief financial officer told Irish business leaders yesterday.

Andy Fastow, who spent five years in US prison for hiding billions in Enron losses and debt via partner firms, said too often businesses exploit loopholes to produce misleading pictures of their true worth. He said corporate kingpins can "hide behind the rules" while never considering the ethical basis of their acts.

"I committed the greatest fraud in corporate American history, and I had never even considered that was a possibility. I thought I was doing the right thing. I thought I was a hero," Mr Fastow told a 1,000-strong crowd at the Pendulum Summit at the Dublin Convention Centre.

"I'm probably the most egregious example of this way of thinking. But it's very common, especially in business," Mr Fastow said.

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He told the audience -among them executives from hundreds of firms here - that business people in Ireland, as everywhere, should question whether their policies are not only legal but based on ethical principles.

He said companies, backed by lawyers and accountants, almost universally "want a lower tax bill. We're going to find a way to get that - not by breaking the rules. By exploiting the rules".

"This is how I thought as CFO," he said. "Everyone gets the same accounting, tax and securities rules. Everyone has the same books. Whichever CFO is best able to exploit those rules gives his company a competitive advantage and that company wins. I wanted to be that guy. I wanted to be viewed as the genius who figured it out."

To uncomfortable laughter in the room, Mr Fastow displayed slides of US multinationals' office buildings in Ireland.

"It's a big part of your GDP, helping companies avoid paying taxes in their home country. It seems good," he said. "The problem is, one day people may wake up and say, 'Who is helping those billionaires avoid paying taxes?' And they may not feel the same way about Ireland.

"When I talk to Irish people about it, they're all proud: 'We're just really smart. We created a competitive advantage'. And that's a good thing. I don't disagree. But I'm not so sure you want me agreeing with you!" he said to the biggest applause of his 45-minute speech.

"Technically I always tried to follow the rules - but at the same time I always tried to be misleading. I was just taking advantage of the rules, capitalising on the situation," he said. "They called me chief financial officer; they should have called me chief loophole officer. That was literally all I did at Enron; I found the next loophole - and we were proud of it!"

Irish Independent

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