Word: enronizing
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...accepted accounting principles prohibit firms from using their rising stock price as a form of income. But that’s exactly what some of these shell companies were designed to do. As the report states, the transactions were just “transfers of economic risk from one Enron pocket to another, apparently to create income that would offset [losses] on Enron’s income statement...
...result, it’s hard to believe that Winokur didn’t know what Enron was getting into. What did the presentation describe as the principal risk the transactions posed? “Accounting scrutiny.” The second risk was that Enron stock would go down, in which case (according to an Enron internal memo) the program would “terminate early and may return credit risk to Enron.” But that risk was not always adequately disclosed to the shareholders whom it was Winokur’s duty as a director...
...presence of an active director on the investigative committee compromises the report’s appearance of objectivity. Representatives holding hearings on Enron have publicly questioned Winokur’s role, and the board-commissioned report could be interpreted as a whitewash, designed to shift attention away from the directors just in time for Congressional hearings and investor lawsuits. As a result, we may wait years to learn the full story on who knew what and when...
...already know some parts of the story, and they don’t look good for Winokur. Perhaps Winokur really didn’t know what was happening at Enron; perhaps he slept comfortably through meetings, trusted management wholeheartedly and ignored every red flag. But this brings us back to the original question: is he the right person to govern Harvard...
...seven-member Corporation is our board of directors, obligated to represent Harvard’s interests in overseeing present management. It chooses its own successors, and its decisions are subject to little effective review. Given his experience at Enron, even when cast in the most favorable light, is Winokur the right person to exercise this authority? Are there no better candidates to serve on the board of the Harvard Management Company, which oversees the endowment, or on the Committee on Shareholder Responsibility? Can Winokur be trusted to guard the guardians...