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Avow or Avoid?: The Public Communication Strategies of Enron and WorldCom
Unformatted Document Text:  Avow or Avoid? 10 any concern about these transactions to rest,” said Lay (Enron announces, Oct. 22, 2001, para. 2). They also announced they were establishing a special committee of the board “to examine and take any appropriate actions with respect to transactions between Enron and entities connected to related parties” (Enron Corp. elects, Oct. 31, 2001, para. 2). The committee would work with the SEC in their investigation and recommend actions it deemed appropriate. To head the committee, the board had elected an apparently independent and well-connected individual, dean of the University of Texas law school at Austin (Enron Corp. elects, Oct. 31, 2001). And the company established Kenneth Lay, who took over as CEO on Jeff Skilling’s departure in August, as the company spokesperson and leader to restore investor confidence. It was Lay who asked the Board to establish the special committee. At the same time, however, they used the traditional legal tactics of denying any wrongdoing and shifting blame. At first, they welcomed the SEC investigation. “We believe everything that needed to be considered and done in connection with these transactions was considered and done” (Enron announces, Oct. 22, 2001, para. 3). But just two days later, they replaced their chief financial officer. “In my continued discussions with the financial community, it became clear to me that restoring investor confidence would require us to replace Andy as CFO,” Lay said (Enron names, Oct. 24, 2001, para. 3). Regardless of tactic used, all of the releases in this period were forward-looking, suggesting that business was and would continue to be as usual. The company would continue to focus on its core businesses and work to enhance investor confidence (Enron announces, Oct. 22, 2001; Enron names, Oct. 24, 2001; Enron secures, Nov. 1, 2001). Only one media outlet picked up on Enron’s SEC problems initially. Power Markets Week noted on November 5, 2001, that Enron had come under formal investigation by the SEC and had been forced to seek new financing. The article quoted the company’s release regarding the commitment from the investment bankers to the effect that proceeds would be “used to

Authors: Reber, Bryan. and Gower, Karla.
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Avow or Avoid?
10
any concern about these transactions to rest,” said Lay (Enron announces, Oct. 22, 2001, para. 2).
They also announced they were establishing a special committee of the board “to examine and
take any appropriate actions with respect to transactions between Enron and entities connected to
related parties” (Enron Corp. elects, Oct. 31, 2001, para. 2). The committee would work with the
SEC in their investigation and recommend actions it deemed appropriate. To head the
committee, the board had elected an apparently independent and well-connected individual, dean
of the University of Texas law school at Austin (Enron Corp. elects, Oct. 31, 2001). And the
company established Kenneth Lay, who took over as CEO on Jeff Skilling’s departure in August,
as the company spokesperson and leader to restore investor confidence. It was Lay who asked
the Board to establish the special committee.
At the same time, however, they used the traditional legal tactics of denying any
wrongdoing and shifting blame. At first, they welcomed the SEC investigation. “We believe
everything that needed to be considered and done in connection with these transactions was
considered and done” (Enron announces, Oct. 22, 2001, para. 3). But just two days later, they
replaced their chief financial officer. “In my continued discussions with the financial
community, it became clear to me that restoring investor confidence would require us to replace
Andy as CFO,” Lay said (Enron names, Oct. 24, 2001, para. 3).
Regardless of tactic used, all of the releases in this period were forward-looking,
suggesting that business was and would continue to be as usual. The company would continue to
focus on its core businesses and work to enhance investor confidence (Enron announces, Oct. 22,
2001; Enron names, Oct. 24, 2001; Enron secures, Nov. 1, 2001).
Only one media outlet picked up on Enron’s SEC problems initially. Power Markets
Week noted on November 5, 2001, that Enron had come under formal investigation by the SEC
and had been forced to seek new financing. The article quoted the company’s release regarding
the commitment from the investment bankers to the effect that proceeds would be “used to


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