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Last Updated: Tuesday, 20 January 2004, 08:59 GMT
Corporate America in the dock

By Stephen Evans
BBC North America Business Correspondent

A string of top executives are due to go on trial in the coming weeks, accused of involvement in the corporate frauds that rocked the US last year. But will the charges stick, and are America's boardrooms now squeaky clean?

Martha Stewart
Martha Stewart: A household name goes on trial

The legal diaries of the corporate world are starting to fill up. Martha Stewart, America's most-famous television kitchen and garden star, finds herself in court this week on charges of insider dealing.

Mark down 22 March for Frank Quattrone, when the former banker with Credit Suisse First Boston returns to court to face charges of obstructing justice.

Clear a space on 4 February for Scott Sullivan, WorldCom's former chief financial officer, when he's due in court charged with a string of dishonesties.

Five days later, John Rigas, the founder of Adelphia Communications, appears charged with others of illegally removing one billion dollars from the company.

It is, on the face of it, an impressive array of executives who will, no doubt, deny the charges and some, perhaps all, may be found innocent of crime.

Corporations are complicated organisations, and pin-pointing who knew what when and who did what when is rarely clear.

Investigators have at least delivered some alleged perpetrators into the hands of juries after delivering them into the hands of police, who made some of them suffer a public 'perp walk' in cuffs before cameras.

Defence strategy

But two questions remain: how many big fish will swim free, and has corporate America really cleaned up its act?

On the first question, the cooperation of Enron's former chief financial officer, Andrew Fastow, ought to help investigators ascertain how far up the notorious company the criminal culpability should go.

Mr Fastow worked closely for ten years with Jeffrey Skilling, one of Enron's chief executives when the dirty deals were done.

And if anybody knows whether Ken Lay, the other relevant chief executive, knew the books were being cooked, it is Mr Fastow.

But there are difficulties. Enron was a sprawling company with a very decentralised, swash-buckling style.

Middle-ranking executives were encouraged to take risks off their own bat. You don't need to be Perry Mason to draft a defence for Messrs Skilling and Lay.

And the form of the cooperation offers another plank to the defence of those at the top.

The strategy of the investigators is to start at the core of the crime and present irrefutable evidence to the wrong-doer, persuading him (invariably him) to help indict people higher up.

Hence in Enron, Michael Kopper was fingered and then helped indict his boss, Andrew Fastow, who, in turn, is being asked to blow the gaff on those at the top.

Mr Fastow, it seems, agreed partly to save his wife, who was also implicated, from a long sentence. The prospect of the two of them both behind bars while their children grew up was too painful to contemplate for long.

But the defence in any resulting trial of either Ken Lay or Jeff Skilling will surely be that the evidence only emerged to further the Fastows' self interest, and so is tainted.

Straight and narrow

So don't clear further space in your diaries quite yet for big trials of big fish.

All the same, the forthcoming clutch of hearings should send some shivers down the spines of any unreformed crooked executives.

The big question, though, goes beyond that: Was the corruption a product of a particular time (the Clinton era, not Bush's, by the way) or is there an ingrained malaise in American corporate culture?

It seems likely that attitudes have changed.

Eliot Spitzer, the New York Attorney General who's done more than anyone to bring wrong-doers to book, certainly thinks that past abuses may yet be uncovered, but new ones are not happening to the same extent.

The air of hubris has undoubtedly gone, and the law has undoubtedly been tightened.

All the same, some of the factors that caused the last wave of corruption remain.

Executive pay still depends on 'making the numbers,' so those who fail to deliver increased profit or share value will still lose out, and so be tempted to burnish the books.

But don't expect any new abuses to emerge soon. It's when stockmarkets fall that that corruption is revealed.

Meanwhile, some people in America's boardrooms might ruminate on one great injustice.

The spotlight remains on Enron and the waves of scandal after it in the United States, while the European public seems to have grown bored with Parmalat.

But then again, fraud in Italy isn't exactly a new thing.

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