(Dis)claiming Kenny
Most people associate Enron captain Ken Lay with Texas, home to the crashed energy giant. Fewer remember that Missouri, where Kenny Boy -- son of a preacher man -- grew up, has had to cope with its share of the shame as well.

The University of Missouri, Kenny's alma mater, has been wrestling with a slow-boiling controversy over whether or not it should divest itself of a bunch of moola Ken laid on the school seven years ago in order to endow a chair in economics. Some members of the MU community have called for its return, while the University, after failing to find an acceptable alternative use (or a professor to fill the chair) has held on.

Can I get a refund?
But a recent Columbia Daily Tribunearticle and an AP story in the Journalism School's Columbia Missourian reported that Lay (bless his heart) came up with a solution that could have settled that controversy for the school.

He wanted the money back.

Well, not for himself, of course. At least not at first. According to the documents, Lay asked that the money be sent back to Houston for hurricane relief. Cynics out there (moi) would note that Kenny seems to have asked for the money just in time for jury selection. Imagine that. Think it's a coincidence?

Let me be blunt: No way. I view this as a shameless attempt to purchase public sentiment at a time when Kenny needed it most. Buying a sympathetic jury through pre-trial PR is an age-old American tradition, entrenched enough to be skewered in popular culture like in Chicago.

And of course, this kind of public pandering is no rarity among CEOs who've crashed their companies right into the dirt. Remember HealthSouth? Ex-CEO Richard Scrushy peppered his jury pool with evangelism and allegedly funneled money through a PR firm to a Birmingham Times reporter who claimed that in return for that $11,000, and promises of more, she "sat in that courtroom for six months, and I did everything possible to advocate for his cause."

Scrushy, of course, walked despite the fact that a handful of his former lieutenants fingered him as the mastermind of an entire web of fraud.

Redirect, your Honor
Speaking of the court, that's where Kenny Boy later tried to redirect those funds. In February, he asked that the money go toward his legal defense. (I guess those Katrina victims can't help Kenny as much as a few more bucks for those high-priced suits on his side of the courtroom.)

Here's the problem. According to what the University of Missouri is saying, Kenny Boy has absolutely no claim on those funds. He gave them to the public school, and that's that. But I'd like to recommend that the university be a little more flexible on this. Hear me out.

Help a brother out
Here's a little unsolicited advice for MU from this alum. First off, in the name of peace and poetic justice, give Kenny back what he gave you: 16,500 shares of Enron stock. Imagine the goodwill you could create by handing this down-on-his-luck (ex?)millionaire a break, a little momento of better times. The great part is, it won't cost you much, MU. You can get shares of Enron Capital LLC (Pink Sheets: ECTPZ.PK) for a mere $0.03 each. The grand total would be $495.

Tell you what: I'll even give you the $500 if you buy me the bus ticket to deliver the check to Kenny by hand. I would love to see the look on his face.

The hot seat
It sounds to me like it's not an easy job to find a suitable academic to fill this post. I can help with that, too.

According to the University, three scholars offered the Ken Lay chair have turned it down, reportedly because of counteroffers made by their current employers. I suspect the real reason is that no one in his right mind wants to be known as the "Ken Lay Professor of Economics," any more than he would want to be the "Bernie Ebbers Chair of Accounting," or the "Dennis Kozlowski Dean of Recreational Studies."

That's why MU should funnel what remains of that $1.1 million straight into a "Ken Lay Chair of Ethics in Economics and Business." (After finishing up this column, I see I'm not the first to have come up with such an idea, nor the wisecracks about ironical endowed chairs.)

I'm 100% serious. Let the ignominy and irony -- together with that money -- work to create something good from one of the worst ethical lapses in American business history.

The root of the problem
At worst, Lay is guilty of overseeing and condoning a massive accounting fraud that inflated Enron stock, made greedy managers rich, and ultimately lost billions of dollars for outside investors. If you ask me, he deserves to rot in jail a long, long time for that.

To put on a happier face, at best, Lay is guilty of letting rampant fraud and bookkeeping shenanigans occur under his watch. (That, unfortunately for those of us who like justice, may not be a crime.)

(Note: Just as I was sending this to press, word came that Kenny Boy and his compatriot Jeff Skilling were convicted on multiple charges. I guess we can now safely go with worst here.)

But here's a harsher truth: The crime/no crime thing doesn't change anything for those worst hit by the Enron fallout. I still get the occasional email from ex-Enron retirees telling me how they lost their entire futures and are stuck working through their golden years when they should be putting their feet up.

These people were the owners of Enron. They were betrayed by management that was supposed to be working for them, but was so determined to "make numbers," that it saw no problem in doing funky deals, little or big, to prop up the financial statements. Crime or not, that's an ethical lapse of the first order.

We've seen small ethical lapses snowball into major accounting scandals time and time again: Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE), Computer Associates (NYSE:CA). And you don't need accounting scandals to nail your company. Management smash 'n' grabs can do the job, as at Tyco International (NYSE:TYC), or crooked deals with the government can do it. Just ask Boeing (NYSE:BA).

Foolish bottom line
I don't pretend that more ethics classes can stem the tide of greed in the management suites across this country. But it certainly couldn't hurt. And it's something we sorely need.

Faith in honest allocation of investor funds is vital to our capitalist economy. Ethical behavior among managers at all levels is a key to keeping that faith. Enron is a perfect example of the risks of the dark side. Don't hide from that, MU. Embrace it.

Make the Enron case the keystone. Hang a Ken Lay mug shot on the wall in the doorway to the department. Embellish the walls with some clippings from today's conviction. Fund research exploring the costs of fudging the numbers. Explain to students that more clarity in financial reporting is not only better for their kharma, it's better economics and better business.

In other words, turn something bad into something better. Let Ken Lay's ill-gotten money work to help eradicate the cheating culture and -- just maybe -- stop a few future Ken Lays.

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Seth Jayson can't wait to see what Kenny Boy's sentence turns out to be. At the time of publication, he had no positions in any company mentioned. View his stock holdings and Fool profile here. Fool rules are here.