The Enron debacle is the crisis du jour in business and political circles, a disaster that one crisis expert calls "a lesson in how to do everything wrong." The company's
reputation has been demolished among all stakeholder audiences, from employees, to investors, to Wall Street. Also implicated in the largest bankruptcy in American history are
high-profile politicians including President Bush, Vice President Cheney and Commerce Secretary Don Evans. And Arthur Andersen's shady dealings with the energy giant prompted
Newsweek to question whether the accounting firm will survive its own image crisis: "[Its] reputation has been tarnished to the point that the Big Five ... might shrink to the Big
Four."
PR NEWS asked leading crisis experts to dissect the situation, telling us where Enron execs and their associates went wrong and what the repercussions will be. Stay tuned to
future issues for further analysis of the PR implications of the Enron crisis.
Laurence Moskowitz, President, Medialink Worldwide, [email protected]
Enron and Andersen both face an extraordinarily complex crisis on many playing fields. Sophisticated accounting rules and regulations, legal stakes, federal oversight, high-
level governmental connections and real-life employee, client and vendor pain combine with Page One political opportunism to make this scenario unprecedented.
Andersen, so far, has appeared to move more quickly and decisively to take control of the situation. But as a partnership, rather than a public entity in its own right, Andersen
has slightly greater latitude and far fewer legal and financial constraints. Enron, already in bankruptcy, delisted from the New York Stock Exchange, and in the targets of federal
and state prosecutors, is prohibited from taking a number of potential communications approaches and hindered in taking others.
But if Enron and Andersen are to survive, developing a clear strategy and obtaining buy-in from all major stakeholders is Step One. The communications plan must ensure utmost
honesty and maximum disclosure of all major facts as they are ascertained, particularly for an accounting firm. Finally, the plan must be clearly and powerfully communicated to
employees, clients, vendors, investors and the public-at-large.
Rene Henry, Retired Director, Office of Communications & Government Relations, Environmental Protection Agency, Mid-Atlantic States
Author, You'd Better Have a Hose if You Want to Put Out the Fire, [email protected]
Enron puts ethics right to the forefront as a major concern. The Enron execs behaved badly and obviously mislead and deceived their employees, the media, Wall Street and the
general public. And why didn't Arthur Andersen step forward and blow the whistle? Isn't there an ethical obligation as a CPA firm?
Enron and Arthur Andersen have given American business another black eye. No wonder the American public today has such distrust in our nation's leaders. Who can you believe and
when?
As far as implications for Arthur Andersen, it will still be around, but who will believe what its leadership says? They have breached trust with the public and media. I would
keep an eye out to see if any Fortune 100 or Fortune 500 companies move from them to another firm in the coming year.
Lanny Davis, Partner, Patton Boggs Crisis Management Team Former Special Counsel to President Clinton
Author, Truth to Tell: Tell It Early, Tell It All, Tell It Yourself: Notes From My White House Education, [email protected]
It is conceivable that when Enron senior officials first realized the outside partnerships would create liabilities that were then hidden from the public, they could have
proactively disclosed the problem, and announced immediate corrective action. Yes, their stock would have suffered, and it is possible that the house of cards would have collapsed
anyway. But it might have given the markets some perception of credibility and could have bought Enron some time to clean house and bring the company back to profitability.
Instead, they disclosed information only when they had to, and then incompletely - thus, compounding the negative effects and leading to the bankruptcy filing on Dec. 2.
Transparency remains the best answer for a public company - it brings accountability and allows investors to appreciate a business model that focuses on real products with real
profit margins.