The Business Ethics Blog

This is Part 3 of Chris MacDonald’s interview with Walt Pavlo, on the 24-year jail term recently handed to former Enron CEO, Jeff Skilling. Pavlo spent two years in jail for fraud and money laundering at MCI. The goal of this interview was to get Pavlo’s special perspective on what it is that causes white-collar crime, and what it’s like to go to jail for it.

Part 1 of this interview was posted last week. Part 2 went on-line yesterday.

(Note: the following has been edited for clarity and length, but I’ve also tried to retain the informal character of the conversation.)

Business Ethics Blog: Interview with Walt Pavlo, Part 3

Business Ethics Blog: The judge in this case recommended that Skilling serve his sentence at the federal penitentiary at Butner, North Carolina, which is a medium-security facility. Does that sound like the kind of ‘country club’ that many people have worried Skilling will be sent to? Because the presumption, of course, right, is that for white-collar criminals, that prison really isn’t so bad for them: big-screen TV’s and golf-courses, and so on.

Walt Pavlo: There are none of those. Even in minimum security there’s no big-screen television. There’s strict control of your movements, in there. The reason he’s got that is because he got such a long sentence, he’s got to be under higher security. He has 24 years. If you’re in a minimum-security camp, there’s the chance that you could just walk off. It’s for his own benefit, his own mental health. We can’t put you in a situation where you could try to escape, because it is such a long period of time.

But you know eventually he’ll get switched to a camp, because he’s a minimum-security person. When he’s got 8 or 10 years of his sentence left, he will be in a minimum security prison, it’ll just take him a while to get there. But it’s a tougher existence where he’s going to be.

BEB: So people who are angry at Skilling shouldn’t worry that his life is going to be too soft or too easy?

WP: No, no, it’s going to be one heck of a punishment. It is a very long time he’s going to locked up with, at that level, very few white-collar inmates. I mean very few. Most of the ones he’s going to be involved with are going to be life-in-prison sorts of people, or people who have sentences very similar to his for other crimes, like for moving large amounts of drugs or, in some cases, murder.
There’ll be very few white-collar inmates. That’s a punishment too, because there’ll be very few people he can really even associate with, and just talk to. He doesn’t know anything about that life. I think that’ll subject him possibly to being singled out and beaten up, and things like that. And to me, as non-violent offender, that’s going to be a very scary environment for him to be in.

BEB: A lot of people aren’t going to have much sympathy. But a friend of mine who’s a prosecutor put it nicely when he said that prison is a form of punishment; it’s not a place we send you to be punished, through violence or whatever.

WP: Exactly. And what does that say about his ability to rehabilitate? You know, that kind of fear and resentment when he’s in there, there’s going to be no rehabilitation done. Over time he will just break. It’s certainly not a life where he’s going to be able to really rehabilitate. I mean if he is, it’s going to be an incredible story, if he can try to find a way to get back or redeem himself in some way. I don’t know how you even do that, with a sentence like that, any place like he’s going.

BEB: Any other thoughts, things you’d like folks to know about Skilling’s case? You’ve got a special perspective on this. Anything you wish people understood?

WP: Even though I’ve gone to prison, and I’ve talked a little about the excessiveness of Skilling’s punishment, I am certainly not one to say that prison should be abolished for white-collar criminals. I believe that there is a place for that.

I just think that they should be treated differently. Not that that means a lighter punishment. They need to be incarcerated in a very strict environment. But I think the monetary side should be looked at, one hundred percent. If the $45 million that Skilling has been asked to pay, if that represents every single thing that he had, that to me is a huge punishment. One, he’s going to be out of money. Two, let’s just say if he went to prison for, I’ll give a number that people might accept, like 10 years. When he comes out, I don’t know where he would ever work again. I really don’t know. I mean, he would have very difficult time ever finding any occupation again. And that means that the only thing that Enron shareholders have to look at is this $45 million that they got and they’re not going to get another penny out of the guy. And he’s just going to go away forever, and I think that’s sad. He didn’t go the extra mile. We’ve defined exactly all that Enron’s going to get back, and it’s fixed dollar amount. He may have some money left over. And he walks away with a lot of knowledge that I think is valuable for us all to look at as far as why these things happen.

[End of interview]

[A unified version of this interview can be found on a single page, here.]