Trial of the True Believers

As the trial of Enron's Jeff Skilling and Ken Lay enters its second week, journalists are again pointing to the connections between the Bush family and administration and the former corporate Goliath. It's certainly not difficult to unearth the laundry list of ties between Bush's tight-knit Republican circle and the company that cheated Americans out of over $1 billion in retirement funds and some 4,500 jobs.

But perhaps the more interesting connection between the Bush administration and Enron is how people from both entities have flouted the law by spinning their own versions of reality and defending their actions with claims of good intent.

No one can deny Ken Lay and Jeff Skilling's leadership of Enron was creative. As Peter Elkind, senior writer at Fortune and co-author of "The Smartest Guys in the Room," told AlterNet in a recent interview, "It was the most innovative company in America, we just didn't know how innovative."

Enron traders were encouraged to seek out every loophole in any law that stood in the way of Enron making another buck. This kind of market manipulation has been referred to as a "phantom deal." In the case of the California energy crisis, there was no shortage of electricity, and yet Enron was getting profits by shutting down power plants to artificially push up the price. Without creating anything, Enron was making billions in profits.

But while many of their deals -- as well as the company's profits -- were "phantom," the fallout from the company's collapse was hardly apparitional. Even now, the repercussions of the energy crisis are being felt. Residents in many parts of California are paying record electricity costs as the remaining debt hovers. Thousands of employees lost their jobs, and an even larger number of people lost retirement benefits.

Despite the diligent cataloguing of the many disingenuous deals made by Enron, the outcome of Skilling and Lay's trial is hardly predictable. That's because the prosecution team has to prove that Skilling and Lay intended to mislead investors, and that they knew the company was headed for disaster. But Skilling and Lay repeatedly insist that they were true believers and never thought the company would collapse. This may come down to the issue of what Skilling and Lay allowed themselves to believe.

It may come as no surprise, then, that both men are eager to take the stand. Rather than feeling ashamed or repentant for the collapse of Enron, Skilling and Lay's lawyers have promised the jury that both men will take the stand. In fact, they're eager to let jurors know just how passionately they felt about Enron.

From Peter Elkind and Bethany McLean's interviews in "The Smartest Guys in the Room," it becomes clear that Enron was a cult of personalities -- driven in large part by Jeff Skilling. It was Skilling's repeated refusal to accept defeat that revealed the chink in Enron's armor: The only thing keeping Enron from failing was Skilling and Lay's desperate insistence that Enron was a success.

The alternate reality that Skilling and Lay had so successfully fabricated, by keeping it sealed off from the public and using every loophole to keep afloat, collapsed as soon as the public started asking questions. And while the illegitimacy of the company's deals revealed Enron to be a house of cards, the repercussions from its collapse -- high energy prices, the loss of jobs and retirement funds -- remain a stark reminder of the very real consequences of allowing those with a fervent ideology access to unchecked power. For those so driven, facts become secondary, mere details to be fabricated in order to further furnish their version of reality.

It's an interesting irony that the more incapable Skilling and Lay are of seeing how their actions were wrong or illegal, the more likely they are to escape discipline. Fortune writer Roger Parloff likens this kind of defense to the "Emperor's clothes" metaphor:

To commit most crimes, one has to intend to do something wrong. Accordingly, truly deluding oneself -- gullibly trusting a deceitful subordinate (in the emperor's case, the tailor), relying on yes-men advisors, resting undue confidence on one's own innovative brilliance -- is a defense. An individual cannot be a criminal unless he has a certain baseline level of self-knowledge. Without that, psychiatrists may have labels for him, but the penal code does not.

In the world of seeking legal relief, it is harder to legally prosecute someone who truly believes in their own sense of reality, regardless of how clearly it may conflict with that of the general public. It's a strange incentive to believe your own lies, to surround yourself with nothing but what you want to hear and people who will support your version of reality.