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Resisting Corporate Corruption, 3rd Edition by Stephen V. Arbogast

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Case 9Lay Back … and Say What?

What a day! Things sure haven’t work out as planned. All that positioning so that I could make a graceful exit is now down the drain. Well, I’m back again as CEO. What do I tell the analysts and employees tomorrow? How do I explain Jeff Skilling’s jumping ship after only six months as CEO?

KEN LAY WAS DRAINED. August 13, 2001, had been an emotionally wrenching day. The Enron board had convened during the day and then continued with a working dinner at the Four Seasons Hotel. Shortly after 8:00 pm, Lay had called the board into executive session. All who were not directors filed out. It was then that Ken Lay announced that Jeff Skilling was resigning as CEO. Lay would be taking his place, stepping back into the position he had relinquished the prior February.

Some of the Enron directors gasped in astonishment. Others had known for a month that this was coming. Lay commented that he and several others had tried to talk Skilling out of leaving but had failed. He gave Skilling the chance to explain his reasons for resigning. Skilling began to speak, then broke down in tears. He talked about not being there for his family; he apologized for disappointing the board. It was an emotional and awkward moment.

Two of the directors “in the know,” John Duncan and Norman Blake, probed Skilling’s explanation:

“Were there problems that Skilling knew about but the board did not—was something in Enron’s business causing Skilling to leave?”

Skilling had responded: ...

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