I began to write about Enron to discover the truth about the company, and to tell others. I knew that I would need educations in law, business, and natural gas, but one discipline that I did not realize I’d need was psychology. I don’t pretend to be able to analyze the executives of Enron, but I do find myself perpexingly unable to simply divide them all up into columns like Good and Bad. The best example of this is Ken Rice. I receive a lot of notes about Ken; he seems to have evoked curiosity in the public, and I think that’s because the media made him out to be interesting for the wrong reasons. We know from news reports that he raced Ferraris, which seemed to be journalistic shorthand for a reckless, sexy man who lived on the edge.
That is partly true, but the reality is much more mundane. He was interesting for reasons the media did not bother to discover. He liked Ferraris, but they were not the most important material possession to him. Scratching the surface, a more stable man you would be hard-pressed to find. He was born and raised on a farm in the middle of Nebraska, which instilled him with good middle-American values. He went to work for Enron and stayed there for twenty years, becoming one of Jeff Skilling’s closest friends. The two had an easy alpha-male connection. They just understood each other.
Then Ken Rice accepted a plea deal, requiring him to testify against his friend. He also testified against Joe Hirko, his Co-CEO at Enron Broadband Service.
Was Ken Rice a traitor? Is he a hero?
In my opinion, Ken Rice was, first of all, a victim of the government just as the other defendants were. The DOJ brought ridiculous counts against him for the express purpose of getting Skilling to crack. Prosecutor John Kroger admitted as much in his autobiography. Rice was looking at fifty years in prison, so the pressure on him was tremendous. As the father of small children, the thought of his children growing up without their father must have been agonizing. (Incidentally, I’ve read interviews with Scott Yeager giving the same exact reason for fighting the DOJ.)
Ken Rice accepted a plea deal for the same reason many others did: it seemed smarter to accept up to five years in prison than roll the dice on fifty.
Ken Rice was a major score for the Department of Justice. One can imagine the backroom cackling as prosecutors high-fived themselves. Ken Rice was going to spill it all in open court. He would put away the “big fish” – Ken Lay and Jeff Skilling. It was in the bank.
The media accepted the DOJ’s template without hesitation. They reported Ken was “Jeff’s best friend” and a “Skilling insider.” They then repeated that, amplifying it so that it became the only important fact about Ken Rice. They played up the Ferrari racing, casually labeling it an “obsession”. They mentioned lurid details from his personal life. His role in the media drama was to be the sexy insider finally doing the right thing by testifying against his friend. This benefited the DOJ by making Jeff appear extremely guilty, and further cementing the myth that Enron was corrupt from the C-Suite to the mail room.
If you read the transcripts carefully, you see that Ken Rice did say some damaging things about Jeff Skilling, but Petrocelli also got some good information out of him.
“Did Jeff Skilling ever conspire with you?” No.
“Did Jeff Skilling ever tell you to…?” No.
“Did Jeff Skilling do that?” No.
Likewise, during the Broadband Trial, Michael Krautz’s attorney dragged out a huge lode of exculpatory evidence.
It seems to me that Ken Rice said the minimum of what he had to say. Certainly that was no comfort to Skilling, who walked into the Broadband court room as Ken was testifying. One can imagine Jeff needing to see it and hear it for himself, to know, deep in his bones, that his friend was ‘betraying’ him by stating that their professional accomplishments were nothing, and that everything else, even their friendship, had been a fraud.
Somebody who knows both Jeff and Ken told me, “Ken broke Jeff’s heart.”
I can understand that. At the time of his trial, nobody mattered as much as Ken Rice to Jeff Skilling. Mark Koenig and David Delainy might have hurt him in a generic way – he was already hurt so badly then, their testimony was but a blip on the radar – but Ken Rice just crushed him.
Cliff Baxter, Jeff Skilling and Ken Rice were a golden triangle of male power and intelligence. They were friends, and they were all hard-charging executives at the same company. They were a megaforce. It was Ken who called Jeff at six o’clock in the morning to tell him Baxter had committed suicide.
Ken said, “Jeff, Cliff shot himself last night.”
Jeff said, “Is he okay?” Notice Jeff’s instinct here, to believe the very best.
Ken said, “No, Jeff. He’s dead.”
But what did Ken Rice owe Jeff Skilling? Did friendship supersede his self-preservation? Could Ken Rice look at his children and tell them he would never see them outside of a prison so that he might remain loyal to Jeff and Enron Corporation? Could Ken Rice go to prison and slowly turn to ash, year after year, comforted only by the fact that he had stubbornly refused to give in to the DOJ? I am positive that Ken Rice loves his children every bit as much as Jeff loves his. Ken was not betraying Jeff – Ken was making a personal decision about his future based on love for his children.
Nobody can begrudge him that. Even Jeff Skilling understands this. If the choice is hurting your friend and employer, or your children, which one do you hurt? Assume you must choose.
Ken Rice is a fully fleshed out man, a whole person with a rich life. He’s one of those brilliant innovators I’m always talking about. He’s special. To lock him away for fifty years is a crime against humanity, just as it is a crime against humanity to lock Jeff Skilling away, or Joe Hirko, or Rick Causey. His intelligence should be utilized to make and move markets. If society demands payment from him, he serves society more by working and thinking than when he is locked in a cell.
Ken Rice went to prison and served his time, and then returned to his life. Meanwhile, Jeff Skilling has been in prison for three years and if nothing changes, he will be in for twenty-one more. Joe Hirko just entered prison and will be there for sixteen months. It seems unfair because it is. The DOJ set it up this way. They inflict the maximum destruction on as many people as they possibly can, without regard to justice or the truth.
I am supposed to hate him. I’m supposed to see what he’s done to people I care about and be full of blazing hatred for him, the way I hate John Kroger and Sean Berkowitz.
But I don’t hate him. Not at all.
I know why he did the things he did. I don’t like the fact that he hurt Jeff Skilling and Joe Hirko with his testimony, but I can’t really blame him for it. The DOJ are the monsters here, for forcing him (and many others) to say what they want to hear to give validity to their fictional indictments. They needed Ken Rice to lock away Jeff Skilling so their entire enterprise would look kosher.
I would gladly argue with him all day about some of the things he testified to. But I would not feel comfortable arguing with him about why he testified.
Ken Rice is not the bad guy. The ETF are the bad guys. Ken Rice is a complex person who was forced to make a Sophie’s Choice. I find it impossible to judge him for that. It is his dumb luck that he was “Jeff’s friend” and an “insider”, which made him so attractive to the DOJ.
This is a strange position to hold. Those I care about at Enron ask how could I defend somebody who hurt the people I care about. My answer is simple: my objective is to tell the truth about Enron. The truth is Ken Rice is a good guy who made a choice that I hope I have the great good fortune to never have to make.