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Why Nothing Will Change Until We Think Differently

Enron Chief Executive, Jeffrey Skilling

PART II
Is the way Americans think about ethics—and even ethics codes themselves—the real problem? 

Personal and professional experiences have allowed me to explore that question in detail. I’ve met and spoken to people associated with shocking financial scandals. Doing so has given me a perspective that I never would have imagined. It has made me think that everything we’re doing to protect ourselves from these scandals may actually be making us less safe than ever.

Genetics? Psychology? Culture? Are Certain People Disposed to Commit Fraud?

As I discussed in Part I, I was convicted of the same crimes as my brother had been 20 years earlier. The coincidences of his situation and mine led me to wonder if genetics played a role. In reviewing numerous studies about crime and genetics, including the famous 1970s twins studies, there was no clear link. More recent studies attempted to isolate a “criminal” gene, but failed to find a reliable predictor of criminality.

In prison, I conducted research as scientifically as I could under the circumstances. After my release, I continued my research. I spoke to hundreds of auditors, fraud examiners, federal agents, and probation officers. I interviewed forty white collar criminals. I spoke with them about their criminal history, family background, and other topics. I found that 95% were in prison on their first offense. Most had never run afoul of the law. These individuals averaged sixteen years in their respective lines of business, were management level or above, and had an average age of 46.

If genetics and family history weren’t part of the answer, what about psychology? When it came to personality disorders, only one of the forty had what appeared to be clinically diagnosable narcissistic personality disorder, characterized by the arrogance, callousness, and self-centeredness the public often associates with these crimes. My anecdotal evidence was similar to that of federal probation officers who work with criminals after release. This contradicts the belief of more than half of the fraud examiners and auditors I spoke to who, when asked, agreed with the statement “Most white-collar criminals are psychopaths.” Experienced probation officers told me that the public and even many experts grossly overestimate these dispositional traits that apply to less than 5% of white-collar criminals.

The Seeds of Scandal

Many scandals start in small, sometimes imperceptible steps. More than 90% of those I interviewed reported that their crimes happened in such small steps that they were fully involved in the crime before becoming conscious of it.

Of the criminals in my study, 85% agreed with the statement “I did not consciously weigh the risk of prison when committing my crimes.” (another ten percent said they were unsure.) Ninety percent reported that they believed themselves to be basically ethical people. When I interviewed these individuals, it became clear that they could not discuss their crime in the context of “right and wrong” outside of a legal framework.

While discussing their acts, the criminals focused on the situation that caused their actions and what the law said about their behavior. They found it difficult to see the broader context of how their action affected others or alternative options they could have chosen. The only exception was one middle aged Asian-American man, a seemingly inconsequential fact that would later have greater implications.

In Part III, I discuss the cultural implications of national heritage on fraud.

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