If you disclose something that is wrong, and you get accountants to check off that wrong deed, and outside lawyers to check off on that wrong deed, is it therefore right?
That's what Enron
(ENE:NYSE - news - commentary - research - analysis) is asking us to believe. By telling us that its ridiculous dealings with the chief financial officer and his private partnership were all sanctioned by outside professionals, they have simply compounded the error. Next they will tell us that Janus, the largest shareholder, knew and wanted those partnerships to generate upside surprises!
What they are doing at Enron is, well, positively -- here we go -- '80s! In the '80s, you had all of these savings-and-loan jokers pleading that the outside accountants and lawyers checked off on massive chicanery. Somehow it was supposed to make the chicanery kosher.
Nope.
What it ended up doing was getting the lawyers and accountants in trouble. The government ended up going after them, too, for abetting the travesties.
Enron didn't use taxpayers' money, so it is arguably not as clear-cut. But the more we probe this Enron, the more we check it out, the more we know it really stinks and that Jeffrey Skilling didn't leave because the stock got hammered, or some other authentic Wall Street gibberish, but because of this nasty, unseemly situation.
We don't want an SEC probe here. We want a Justice Department probe. This isn't about unclear disclosure. This could end up being about fraud.
In the meantime, I wouldn't touch this stock with a 10-foot pole. This one's gonna get real nasty before it gets nice. If it ever does.
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