Enron’s Skilling Appeals Conviction: Was the Law Too Vague?

Jeff Skilling may not be guilty.

Seriously.

Not to say that he didn’t do anything bad. Skilling is no angel.

But to be truly, criminally guilty, you need to a) be convicted at a fair trial, and b) be convicted of a law that is sufficiently precise to meet the standards of fairness.

It’s looking like it’s at least possible that in Skilling’s case, those two criteria weren’t met.

Here’s the story, by Adam Liptak, writing for the New York Times: Justices Hear Appeal of Ex-Chief of Enron

Both the law under which Jeffrey K. Skilling was convicted and the way his jury was selected were the subject of skeptical questioning at the Supreme Court on Monday. The law was too vague, several justices suggested, and the jury selection too cursory….

The bit about the law being vague warrants some explanation.

The basic idea is that in order for a law to be considered just, it has to have certain qualities. For example, there can be no secret laws. Laws also normally have to be general in their formulation (so, you can have a law that says “It’s illegal to do X” but not a law that says “It’s illegal for Dave to do X.”) And laws also have to be sufficiently clear and specific that citizens can know, in advance of acting, whether they’re about to break a law or not. This is so that the law can actually guide citizens’ behaviour. So, for example, you can’t have a law that says “It’s against the law to do things that displease the King.”

The worry, in Skilling’s case, is that the federal law under which he was convicted (title 18 of the United States Code, section 1346) is too vague. Title 18 is where anti-fraud laws are found, and section 1346 specifies that the term “fraud” also “includes a scheme or artifice to deprive another of the intangible right of honest services.” Now, if you’re wondering what the heck that means — well, that’s precisely the problem. Basically the idea is supposed to be that it’s illegal to defraud your employer. But as was pointed out in Skillings’ appeal, section 1346 may be so broad that it effectively criminalizes all kinds of workplace dishonesty — including many things that no one would think of as illegal. And it’s impossible to follow a law the scope of which you cannot predict.

So, while no one is saying Skilling is innocent, he may not be guilty of the crime of which he was convicted.

1 comment so far

  1. John M on

    This immediately made me think of the surprising acquittal of Cioffi and Tannin about 4 months ago. Back on the evening of 19/20 June 2007 there was a sense of apocalypse. We bloggers were expecting the two Bear Stearns hedge funds they managed to bring down a good bit of the financial services industry (that took longer than we figured) and I actually sent Doris Dungey a poem about it (she replied with the news she was spending the evening dipping into “Gravity’s Rainbow”).

    The failure of the law to redress the balance over that one combined with the earlier farce over Martha Stewart and now this incident has led me to conclude that we’re not looking at a coincidence here. These laws are designed to break.

    “2 Bear Stearns Fund Leaders Are Acquitted”, by Zachery Kouwe and Dan Slater, New York Times, November 10, 2009.


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