Outspoken Alumnus Blames HBS for Enron Debacle

The demise of Enron, the once-vaunted energy and trading company, is a complex affair. On December 2, 2001, the company filed for bankruptcy. Last week, its shares were delisted from the NYSE. The financial press is awash with speculation on the cause and ramifications of what has been dubbed “the largest bankruptcy case in American history.” Many parties were involved in the chain of events that led to the company’s dramatic collapse, including Enron’s senior management, Andersen (the company’s auditors), investment banks, law firms, and perhaps even politicians.

On January 10, 2002, John LeBoutillier (MBA ’79, Section A) wrote an article in the online newspaper NewsMax.com identifying the historical absence of ethics from the required curricula of HBS and other business schools as the root cause of the “gross ethical blind spots” responsible for Enron’s collapse. LeBoutillier cites the alleged comments of a sectionmate during a Productions and Operation Management class in the fall of 1978.

The case discussion involved the decision facing a company selling harmful-potentially fatal-products, LeBoutillier’s sectionmate recommended that the company should continue to manufacture, adding “it’s the government’s job to step in if a product is dangerous.” LeBoutillier attributes the comment to Jeffrey Skilling (MBA ’79, Section A). In February 2001, Skilling became Enron’s President and CEO, before resigning in August 2001.

“Starting with an admissions policy that selects potential students for ethics and character as well as brains, [Harvard and other business schools] need to return to the goal of teaching their students to be good citizens first and moneymakers second,” continues LeBoutillier. In 1987, he penned a similar article in Newsday, claiming that “rationalization for white-collar crime was the standard response” during HBS class discussions involving ethical debates. In this earlier article, he scorned the fact that the main topic of common interest at business school is financial reward, and advocated that first-year HBS students should spend a day talking to white-collar crime convicts at a federal or state prison.

LeBoutillier’s articles paint a largely negative picture of Harvard Business School. Last week, his most recent article circulated quickly amongst the student population. Many students expressed concern that the article did not accurately reflect the current emphasis on the importance of ethical decision making in the HBS curriculum. Moreover, it was generally felt that such articles-no matter where they are published-have the potential to contribute to negative stereotyping of HBS graduates in the outside world.

LeBoutillier, who served a single term in 1981-83 as Republican congressman for New York, is no stranger to expressing his views on teaching at Harvard. After graduating from Harvard College, and whilst in his first year at HBS, he wrote a book entitled “Harvard Hates America.” As a politician, LeBoutillier was best known for his description of Thomas “Tip” O’Neill, the prominent Boston Democrat and U.S. House Speaker, as “big, fat, and out of control-just like the federal government.” O’Neill responded that he wouldn’t know LeBoutillier “from a cord of wood.” But when LeBoutillier ran for re-election in 1982, O’Neill sent his personal aide to raise thousands of dollars for his opponent.

John LeBoutillier agreed to speak to The Harbus last Wednesday. In his interview, he confirmed his belief that “management greed” was responsible for the Enron’s collapse, and restated his opinion that there was a lack of emphasis on instruction in ethical decision making whilst he was a student at HBS. “There was an ethics elective in the second year,” said LeBoutillier, “only about 40 students took this class.”

Surprisingly, he was not aware of the strong emphasis on ethics (in the form of LEAD and Foundation’s LVDM) in today’s Required Curriculum. Nor was LeBoutillier aware of the role of HBS Community Standards in every aspect of life at the School. At the very least, by not acknowledging more than twenty years of evolution in teaching methods at HBS, LeBoutillier’s conclusion that “At Harvard Business School … you’re considered soft … if you dwell on morality or scruples” is grossly misleading and damaging to the good name of the School.

Given the harsh tone adopted in his articles, it was also surprising that LeBoutillier expressed fond memories of his time at HBS. In the absence of a required ethics course, he pointed to the mentoring role that professors often would play. In particular, he pointed to a favorite piece of advice from a professor advocating the need for balance in life, and the perils of overemphasizing the importance of work.

These days, LeBoutillier’s main line of work is running a private charity dedicated to finding and repatriating POWs and MIAs in Vietnam, Russia and Laos.