“Buy Enron stock today!”  These were Jeff Skilling’s ending words to the group of civic and business leaders assembled at Southern Methodist University in Dallas in 2001.

We had just finished interviewing him for an upcoming McCuistion TV program on the energy situation in California. (Under Skilling, Enron adopted market-to-market accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value.) Skilling joked about the California energy crisis at one meeting of Enron employees by asking, “What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on.” Skilling later attributed the remark to frayed relations between Enron and California. His employees, meanwhile, plotted to keep the price of energy high in California.

Off the record I had asked about Enron’s ethics policy- as I was writing a paper on corporate ethics for an MBA class. “Solid,” he said. “We have an ethics policy that covers everything you can conceive of.  Not that it’s needed, you either follow an ethics policy or you have one on the shelf.”  I kid you not! Honest… that was the gist of the conversation.

We then ran to set up the camera to catch his speech. Jeff Skilling instantly captured our attention with, “Enron got hammered last week.” He proceeded to tell a joke about what you would want someone to say about you at your funeral. The punch line, “Look, he’s still moving!” got laughs. He added, “After the equity markets last week, I hope they say that about us too.”  In hindsight – rather ironic.

Jeff Skilling addressed Enron’s pioneering spirit, the changes in the energy business and a tale of two cities, telecom and the efficiency of communications and the gas and oil industry.  He made an argument for vertical integration and the breaking down of the monolithic corporations that have for so long dominated the landscape in these fields.

With obvious pride he told us that Enron is the Toyota of the energy industry; delivering a package of energy cheaply. He warned us of California’s deregulation issues, yet stated, “California is the most regulated market in the US right now.” Throughout his speech and the TV interview he’d held with us earlier, he was composed, cordial and gracious as he became the head of the then most innovative company in the world- according to Fortune magazine- lauding it for 6 years in a row. And at its Houston headquarters- on a can’t miss it banner- Enron self-proclaimed itself, “The World’s Leading Company.”

So what went wrong?  It wasn’t supposed to happen this way? How did this successful giant topple so quickly? What did we miss? Or did we just not question their, “Anyone who doesn’t understand our business just doesn’t get it” inference? Yet even Goldman Sachs, at the top of the heap back then, would admit they had to take the company’s [Enron’s] word on its numbers. Who really cared about its convoluted finances, its numbers, as long as Enron delivered? What Wall Street most cared about was smoothly growing earnings.

Enron may have been the world’s leading company and that may have contributed to the culture of arrogance and hubris. Here was a company that encouraged flouting of rules. Yes, a pioneer, generating more than 80% of its earnings from wholesale energy operations and services. Reports increasingly warned, “they predict earnings practically to the penny;” and, “they have Wall Street beaten into submission.” In early 2001, Jim Chanos of Kynikos Associates commented that no-one could explain how Enron made money. Doug Millet, COO of Kynikos said, “they’re a giant hedge fund sitting on top of a pipe line.” And one with low returns at that.

On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.  On March 28, 2001, PBS’s Frontline interviewed Skilling, where he claimed Enron was one of “the good guys”.  In August of 2001, Jeff Skilling stepped down as CEO of Enron.  A former employee, one of the many left financially decimated, said, “He saw what was coming and didn’t have the emotional fortitude to deal with it.”

Was it greed? Compensation was geared toward enriching executives rather than generating profits for shareholders. And hubris, not only did Jeff Skilling not give a reasonable explanation for leaving, but the company itself dismissed any suggestions that his departure was related to any problems within the company. Conjecture had it that Skilling knew the falling stock prices would wreak havoc on the various partnerships and cause Enron’s eventual exposure.

Stepping back into his role as CEO, Ken Lay said,”There was no accounting, trading or reserve issues.” Really Mr. Lay? While admitting Enron’s disclosure practices were less than adequate, Lay continued burying important information. In an October 16th press release, perhaps the one contributing to the beginning of the end, Enron reported a $618 million dollar loss, writing down shareholder equity by $1.2 billion. The big question remains; f Enron had ceased its game playing could the company had survived? Instead, a public company with thousands of employees were left unemployed, without retirement funds, investors lost billions in unsecured loans and derivative exposure; JP Morgan with $500 million; Citi, the same, Dynergy, $75 million; and the list goes on.

And so, a $100 billion dollar company, with 30,000 miles of pipeline in 44 countries, the leading electricity, natural gas provider in the world… a public company whose employees and shareholders counted on management, the Board and auditors to look out for their hard earned interest- fell- hard!  A senior Wall Street executive said of Enron’s debacle, “It disgusts me and frightens me.”

Yet, ten years later, we haven’t learned our Enron lesson and so to some degree, similar situations keep happening, over and over and over. Kind of reminds me of the movie Ground Hog Day.

And speaking of Ground Hog Day- this February 12th- we present you another recurring corporate story of greed and hubris- as told by Citigroup whistle blower, Dick Bowen. who tried over and over to call attention to the quality of its mortgage portfolio.

Join us as we continue talking about things that matter… with people who care.

Niki Nicastro McCuistion
Executive Producer/ Producer McCuistion
Speaker/ Author on leadership and governance inspiring transformational change, through conversations that matter.

Amidst the financial meltdown over the last few years, there has been  a seeming breakdown of the ethics of corporate executives. Some observers believed that the regulatory changes under Sarbanes-Oxley legislation passed in 2002 would eliminate illegal and unethical behavior, but is that the case?

Joining Dennis McCuistion to discuss this and other issues surrounding this question are:

• Sharon Allen: Chairman of Deloitte LLP
• Todd M. Bluedorn: CEO of Lennox International,Inc
• Jared Richardson: Sr. Counsel of Energy Future Holdings

Todd Bluedorn tells us that essentially corporate ethics are about basic compliance, “you don’t lie, cheat or steal.” He believes that there is  more to this though, “It’s about selfless leadership…  and a balance, not just being selfish. It’s also courage and an internal and moral ability and willingness to speak to  truth.”

Sharon Allen tells us that the overall outlook for corporate America is good, it’s encouraging. Companies are focused on being good, ethical citizens, extending that to their employees and the individual stakeholders they serve. “It’s important to instill that… It’s too easy to say, ‘that’s business and that’s personal.’ No, ethics are ethics.”

Jared Richardson tells us that in any industry there is a code of ethics.  A company is its “Ethos – which develops from the people that make up the organization.”

Dennis mentions Enron, one of the biggest debacles and corporate bankruptcies in history and asks about Enron’s corporate ethics. He mentions that Jeff Skilling had been interviewed by us in 2001 and made  a point of referencing the companies 64 page ethics manual. Skilling also spoke to a group at Southern Methodist University that day- and  he shows a short clip of that presentation, asking “was a lack of ethics involved in the downturn of Enron?”  Todd’s comment:  “Skilling would have failed the selfless test!’

The guests agree it’s important to differentiate what has happened in the last 18 months from “just” ethical causes. The meltdown was as a result of much more-  structural issues and other fundamantal causes.

As Sharon reminds us regarding Sarbanes-Oxley,

“No oversight will ever solve internal  problems… It still comes down to  how an organization presents and governs.” Sharon cites a Deloitte study, that employees first look at ”their  manager and then their direct supervisor for their moral compass,” before other factors such as positive reinforcement, compensation and their peers.

Todd reminds us that,”It’s important to have structure and compliance and to force people to face commitments. It’s not only relying on good people and leadership.”

Jared agrees, that yes, it’s about the tone at the top and the direction from senior leadership and establishing a culture of ethical compliance.  But, he says,

“It goes beyond that, beyond the legal limits, if you will. It’s more than just the folks at the top, it’s at every level. The person you hire today at a starting  analyst position may be a senior manager tomorrow.”

In response Dennis introduces a Pinkerton study that says 30% of the population  not only will steal if the opportunity arises, they will create an opportunity to do so. Forty percent will steal if there is little danger of getting caught, and 30% won’t steal at all.

The guests discuss the pressure that organizations are under to produce, most especially in business downturns. They touch on the global economy and how there may be “unique practices acceptable elsewhere but not here.” Yes, global organizations are coalescing around acceptable standards.

Statistics on why people make unethical decisions in the workplace are discussed:

• 80% Lack of personal  integrity
• 60% Job dissatisfaction
• 44% Financial rewards
• 41% Pressure to meet goals
• 39% Ignorance of code of conduct

They concur that at the end of the day- its still about personal integrity.

Todd Bluedorn leaves us with a thought that summarizes the theme behind this program, “If you live for today, you’re going to lose tomorrow.”

And a special thank you to the Institute for Excellence in Corporate Governance,University of Texas at Dallas, School of Management, (http://som.utdallas.edu/iecg/) for providing the guests for this 4 part series on Corporate Governance.

As always, thank you for joining us to talk about things that matter with people who care,

Niki Nicastro McCuistion
Executive Producer/Producer

***

1808 – 11.15.09

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The federal government took many quick actions in the wake of the credit crisis in order to stop the damage. Now it wants to implement new regulations to prevent future problems.  In this episode of McCuistion TV, we examine changes in corporate governance.

Joining Dennis McCuistion, for a lively discussion on this issue are guest experts:

Edward J. Durkin - Director of the Corporate Affairs Department of the United Brotherhood of Carpenters and Joiners of America

Francis H. Byrd – Managing Director and Co-Leader for the Corporate Governance Advisory Practice at The Altman Group

Robert Royer – Partner in The McPherson Group and former Legal and Legislative Counsel to the Securities Industry Association and former General Counsel to the Joint Committee on the Library of Congress and Counsel to the House Administration Committee of the United States Congress

Would you have believed me if  I had told you in 2007 that these things would happen…

• Bear Sterns and Lehman Brothers disappeared
• Fannie Mae, Freddie Mac and AIG have been nationalized
• Washington Mutual became the largest bank failure in history
• The $300 billion auction rate securities market disappeared
• Merrill Lynch was bought by Bank of America
• Morgan Stanley and Goldman Sachs are now bank-holding companies
• Congress approved a $168 billion economic stimulus package in February 2008, a $300 billion homeowner relief bill, and a $700 billion bailout of the financial system
• The Treasury has guaranteed $1.3 trillion in money market funds
• FDIC has increased deposit insurance to $250,000
• The Federal Reserve has injected over $1 trillion of liquidity into the banking system

…and if you were in DC at the time, what would your response have been?

The discussion on corporate governance focuses on what Government has done thus far and what it is likely to do.

Robert Royer tells us of the mood in Congress and that it (Congress)  “is  fashioning a  broad yet specific approach to the problems of meltdown.”  He informs us that there has been some legislation produced by the Administration and the House Banking Committee while while the Senate Banking Committee has been fairly quiet throughout the process.  The two banking committees, House Financial Services and the Senate, are “the two principle engines of any change that might take place in this area.”

Ed Durkin tells us about unions, their funds, and how they impact our economy, while Dennis reminds us  that union pension funds are huge, saying that “People think of unions, from a ’40-’50′s perspective.” Durkin addresses this issue by discussing that Unions were the first to put in place employment pension funds.

According to Durkin, “unions are in a unique position to blend the interests of their members as workers as well as the interests of their members as owners.”

He believes we need to come up with a long term approach of value enhancement, reminding us that “the idea of workers owning America is one that people don’t understand.” Presently, there are over 100 pension funds in the country. He says, “we invest in the market.”

Francis Byrd tells us that board governance has now changed dramatically. “Share holders are far more interested in oversight of management and risk, strategic planning. They are on top of management, a huge dramatic change.”

Securities Exchange Commission (SEC)

The Securities Exchange Commission is a government agency.  Their role is to protect investors, not just institutions but individuals.

Has the SEC fulfilled its responsibility to its investors?

Royer says, there was a  lack of oversight and responsibility under Secretary Christopher Cox citing the SEC’s handling of Madoff.  They believe the SEC should have been tougher as the SEC did not have the most capable people with the best knowledge of exotic financial products.

With Chairman Shapiro there should be improved disclosure on companies and they concur that he is the right person for a very big task. They believe that Cox did  few good things, such as modernizing disclosure, but the new group will be more aggressive.

Federal Reserve and the Treasury

The panelists talk about the Federal Reserve and the Treasury and the power plays between them, over who is going to be that “over-arching regulator.”  The prediction:  The Fed will probably continue being in charge as the systemic regulator, despite  past missteps.

From the move to control executive compensation to amending proxie votes so brokers can not use shareholder’s votes to elect corporate directors, to proposed new regulations and the political environment – The Government’s Response to the Crisis in Corporate Governance gives us a well rounded education on what we must do to reduce future risk and negligence in corporations today.

Overall the crisis and meltdown may have caused much needed scrutiny. Thus, we are looking at longer term value creation for the good of all concerned.

And a special thank you to the Institute for Excellence in Corporate Governance,University of Texas at Dallas, School of Management, (http://som.utdallas.edu/iecg/) for providing the guests for this 4 part series on Corporate Governance.

Niki Nicastro McCuistion
Executive Producer/Producer

***

1807 – 11.08.09

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This is part two of a two part series on pharmaceutical companies and their relationships with the Food and Drug Administration (FDA). Our focus is on the efficacy of prescription drugs as well as the cost for the consumer.

Jonathan Emord, attorney & author of The Rise of Tyranny and Dr. Charles B. Simone speak on the truth about the FDA.  An enormous amount of marketing dollars are spent by pharmaceutical companies to market their drugs. Thus,  patients learn to demand certain drugs from their doctors.  The problem with this is that often times over-the-counter drugs (i.e. Aspirin) or nutrients (i.e. fish oil) will have the same effect on one’s lifespan as a prescription drug.

Jonathan Emord has defeated the FDA six times and is well-versed in the issues surrounding the corruption of the United States health care system. At the center of the FDA issue is that of accountability. The checks and balances that are in place for government are non-existent for the FDA.  The FDA Commissioner has the authority to create law (regulations), enforce violations, and judge the violation.  The Commissioner of any independent regulatory committee is virtually all-powerful. This means that 3/4 of the laws that are made are not made by representatives in Congress, but they are in fact made by unelected officials.  And because of the controversial nature of the committee issues and the fragile nature of congressional elections, congressmen will avoid making the tough decisions and instead diplomatically mail a letter to the regulatory committee.

Another key component to concerns about the FDA is the way that economics play a role in FDA approvals and rejections. Simply put, the government has censored information for solely economic reasons.  They further discuss the specifics of how and why they do this and the resulting effect on health care.

To learn more about censorship, Dr. Simone‘s website will provide more information. He will also provide you with the tools to show you what you can do as a consumer to make a difference in these issues.

***

04.05.09 – 1726

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Did you ever wonder whether the prescription drugs you pay so much for are really bargains and even more importantly, whether they’re safe? Many of us share this concern, especially since the Food and Drug Administration (FDA) is supposed to be the regulator which assures that drugs are both safe and effective.

Jonathan W. Emord , Dr. Charles Simone of the Simone Protected Cancer Center and author of Cancer and Nutrition is joined by , author of The Rise of Tyranny. In part one of a two part interview with Dennis C. McCuistion they discuss the effects of politics and bureaucracy on prescription drug costs and safety.

One would think that the FDA would be one of the least corrupt government agencies, as it’s dealing directly with the health and well-being of American citizens. Unfortunately, it has become increasingly well-known that what the FDA approves is often times based more on politics, bureaucracy and economics than health. The concern during recent years is that bureaucrats have been having an enormous amount of influence in what the FDA approves. In fact, the commissioner of the FDA has knowingly allowed unsafe drugs to enter the marketplace, in order to protect the proponents of those drugs so that they don’t suffer economic hardship.

Of the 19 industrialized countries, the United States is #1 in the amount of money we spend on health care and #19 in how much bang we get for our buck. The argument for the increased cost of prescription drugs is that it’s due to the FDA’s strict requirements on research. However, if you look at history you’ll find that members of the FDA have knowingly allowed harmful drugs to hit the market. Simone and Emord expound by giving several examples of times where the Commissioner of the FDA intentionally passed drugs that were undeniably confirmed to be dangerous. They went on to further site instances where the medical reviewers (with political managers above them) required well-respected scientists to rewrite their reports and threatened if they did not. Because of this type of treatment, scientists are required to spend more money to protect themselves, thus the cost of drugs increases.

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03.29.09 – 1725

Is your home worth more than your mortgage? For many Americans that is not the case and they fall further and further behind in their payments.

Yet why did so many Americans obtain mortgages they should not have?

Have you wondered why you can’t pick up a paper today without reading about someone having their home foreclosed on and what caused that problem?

The number of Americans behind on their mortgage payments keeps increasing. For some- they obtained mortgages they could not keep up with. Many mortgages were given to people who could not repay. According to panelist: Richard Bitner,” the mortgage industry is essentially a food chain-

Borrowers on one end and investment banks, rating agencies and securitization on the other. Mortgages were bundled and sold off to investors world wide under the belief they would perform better than they did. There was a belief that mortgages were low risk, like bonds.”

Panelist: C.K. Lee adds “ People owning homes is a good thing. Everyone from the President to mortgage bankers have said so- BUT- But there was a flawed premise behind this . The problems started with investment banks and Fannie Mae and Freddie Mac- operating under the auspices of government.”…

In this program we’re going to examine, in simple language, all the mistakes and fraud that led us to where we are today and the many causes of the mortgage debacle.

Panelists include:

• C.K. Lee –Managing Director; Commerce Street Capital
• Richard Bitner- Author; Confessions of a Sub Prime Lender

***

1903 – 2.20.11

Most Americans know that our federal government debt and annual deficits are unsustainable. The question is: what should be done to cut government spending? Solutions to the problem are not only hard to identify, but even more difficult to implement politically.

Join Dennis McCuistion and panelists as we share real solutions to save America’s financial future. Panelists are:

• David Walker: Former Comptroller General, and
• Mike George: Founder, Strong America Now

Unless you’ve been under a rock, or failed to see our recent program on the subject, you know that our federal government’s $14 trillion debt, its annual $1 plus trillion deficits and the unfunded liabilities for social programs are unsustainable. The problem is easy to identify, not as easy to understand the causes, but very difficult to not only identify solutions but implement them politically.

On this program you’ll hear some of the most creative ideas you haven’t heard yet. Regardless of your politics, you probably would like to see many of these solutions implemented. You won’t go to Iowa, but would you contact your elected representatives and make your views known. Our country’s future depends on it.

Thanks once again for joining us as we talk about things that matter… with people who care.

Niki Nicastro McCuistion
Executive Producer/ Producer
Co-Founder

***

1908

The direct debt of the Federal government is over 14 trillion dollars and increasing at a trillion dollars a year; not to mention the tens of trillions in unfunded liabilities.

Joining host, Dennis McCuistion are:

• Mike George: Founder of Strong America Now and developer of the Lean Six Sigma Process; a technique for determining and eliminating waste, and
• David Walker: Former Comptroller General of the United States and CEO of the Government Accountability Office from 1998 to 2008. He is the author of Comeback America: Turning the Country Around and Restoring Fiscal Responsibility.

The discussion focuses on the sustainability challenges which threaten the US economic future. According to both guests, the survival of the Republic is at stake and in some cases we don’t even understand what the problem is.  Waste in government is at an all time high, with the Department of Defense being one of the government’s biggest wasters of resources.

The conversation differentiates between corruption and waste, spending increases between 2009 and 2010, and how much higher spending still is compared to receivables.  The challenges and solutions may surprise you.

Tune in to discover what needs to be done to reclaim our children and grandchildren’s future, and where, as always, we continue discussing things that matter with people who care…

Thanks once again for joining us…

Niki Nicastro McCuistion
Executive Producer/ Producer
Co-Founder

Dan Burrus is considered, one of the top three gurus in the country on the future. In the 90’s he wrote the best seller Technotrends and many of his key points have become fact. His newest book, Flash Foresight: How To See the Invisible And Do The Impossible, takes a look at what we can do to transform our lives- in this century and decade- and pokes holes at the traditional ways of looking at the world and how we run our businesses.

He asks, “wouldn’t it be amazing if you could predict the future and be right?” Dan states that we can indeed predict the future. And we can have a better future as a result. Dan who bases his predictions on scientific principles tells us, “we all have a sense of foresight, but we don’t know how to trust or use it, yet it is a sense we can accurately make sense of”.

In part two of this series Dan talks about how to see invisible opportunities and solutions to seemingly impossible problems. He covers several additional points from his book:

• The key to doing something that seems impossible is to see invisible solutions.
• Take your biggest problems and skip them. You’ll often find that if there is a recurring problem, that isn’t the real problem you have to solve.
• Opposites work better.
• Anticipate by solving tomorrow’s problems before they happen.
• Direct your future or someone else will. Take charge of it.

His rapid fire dialogue and common sense solutions to many of the quirks of life and business challenges we all share will leave you saying, “Now why didn’t I think of that?”

Tune in and hear more of these incredible insights, as we talk about things that matter with people who care…

***

1919 – 9.18.2011

The last several years have hit many homeowners who have little to no ability to repay their mortgages.  Fourteen million  of these homeowners have no equity in their homes and owe the lender more than the property’s appraised value.

Foreclosures may be up, however the foreclosure process varies from state to state.  In some states short notice is given by lenders.  In others, homeowners have 9 months to 18 months before a  foreclosure is posted.

What can lenders and homeowners do to work together?  Is it at all possible for both the lender to profit and the homeowner to keep their home?

Joining Dennis McCuistion to discuss the various options to foreclosure and  how to work with a lender to keep from being foreclosed are the following panelists:

• Richard Bitner – Author of: Confessions of a Subprime Lender
• Linda Davis – Housing Director: Consumer Credit Counseling Service
• George Roddy – CEO of The Roddy Report

Join us as always as we talk about things that matter… with people who care.

Niki Nicastro McCuistion
Executive Producer/ Producer

***

04.24.2011 – 1904