This is an amusing take on living an asset-light life. Jeff Skilling’s concepts live on!
Monthly Archives: August 2010
The Whistleblower Who Isn’t
On Friday, September 17, Sherron Watkins will visit Heidelberg University, of Tiffin, Ohio. She is reportedly relaying to the “Heidelberg community” her “personal experiences she had with Enron as the whistleblower.”
Once again, Sherron Watkins is arbitraging a story that is not only untrue, it is dangerous and irresponsible. She was not a whistleblower. Whistleblowers ruin their careers; whistleblowers risk something by speaking out against something wrong or illegal. What Sherron Watkins did was the antithesis of that.
One thing that always bothered me was a question that was asked numerous times at the Skilling/Lay trial. For quite a while, Cliff Stricklin questioned Dr. Lay over and over about the day he met with Sherron Watkins after she sent that memo. Over and over again, both Ken Lay and Jeff Skilling agreed that Dr. Lay had NOT mentioned his meeting scheduled with Sherron Watkins only three hours after the meeting with Skilling.
Jeff, who had left the company by this point, said they discussed some ideas he had. Lay agreed. Neither of their stories ever changed. Cliff Stricklin and the DOJ apparently believed that Lay and Skilling had a strategy session about how to deal with Watkins, but the facts didn’t support that.
So I began to think about that meeting. And I studied the memo, I began to see it in a different light. It seemed an aggressive note to me, and vaguely odd without any identification on it. She said there was the appearance of accounting improprieties, and she wanted a piece of it. It seemed like blackmail.
Others I spoke to read it the same way. People she worked with, and people who worked in other divisions, and people who knew her personally all agreed with the central thrust that she was basically telling Ken Lay that if he knew what was good for him, he’d start treating her a little bitter, or else he’d have a PR problem on his hands the likes of which he had never seen before.
Sherron Watkins made an appointment with Ken Lay. Ken Lay probably had no idea what to think. Here was an employee who was making thinly veiled threats and she wanted an audience with him. I think we step outside what we know about Ken Lay as a boss, we can say with 100% certainty that he was a good man, a very strong man, and he had certain ideas about the roles of men in society. Basically, if he was being blackmailed, the gentlemanly thing to do is hear her out, and not whine about it like a little bitch to Jeff Skilling. After all, Jeff no longer worked there. And it probably wasn’t an entirely business situation; there had to be a personal element to this. Sherron was threatening him as well his company.
I have no doubt that Ken Lay never mentioned Sherron Watkins to Jeff during that meeting. After the meeting with Sherron, Ken Lay called the attorneys. He probably did want to find out if there was any truth to her allegations. When the attorneys completed their investigation, not much happened. Sherron had been moved to Cindy Olson’s group, and she’d gone on vacation to Mexico.
When she returned, she didn’t pursue it. She just quietly shut up. A strange reaction for someone who was concerned that the company would implode in a wave of accounting scandals. She didn’t call the WSJ. She didn’t call the Attorney General or the FBI. She just… shut up.
In fact, she was quiet until after the company collapsed. Only after an investigation had been launched to find the author of the memo did she finally come forward. Then several things happened. The first is the liberal media immediately liked her because she lent credibility to the theory they were already working under, which is that Enron was corrupt. Prosecutors liked her for that reason as well. And suddenly it was easy to say that she was a whistleblower instead of what she really was – a manipulative mid-level employee who believed that it was unfair that everyone else was getting rich and she wasn’t.
Despite the fact that she admitted under oath that she committed the felony of insider trading, she launched a business to teach people who to be ethical. It’s been nine years since Enron collapsed and she is still milking that title.
She isn’t a hero. She isn’t a whistleblower. She is a liar and a criminal. However, I will give her credit for one thing: her timing with that memo was positively Teutonic.
As she goes from lecture hall to lecture hall, spreading the lies about her involvement in Enron, I feel only old anger at her – the anger most executives can’t even muster. I am angry because while many of the executives went to prison and have suffered financially and have seen their careers crumble, she was never punished for the illegal and unethical things she did.
She is religious now, and active in a church where a friend who attends the same church says that she is very devout. I hope for her sake it is sincere. But the fact that she is continuing to lie and lecture tells me it isn’t. Like everything else about Sherron Watkins, I think she does it for appearances, not because it’s actually true or actually in her heart.
Filed under Enron
Jeff Shankman’s Gallery 4411 Montrose Is Up For Sale
Via Culturemap:
When the gallery megaplex at 4411 Montrose opened its doors over five years ago, the moment represented a sea change in the Houston contemporary art arena. The building was to be a monumental viewing space ensconced in a mod concrete cube, culling together the international art acumen of Barbara Davis’ former Colquitt Street address, Eastern Eurocentric offerings from Anya Tish’s former location on Sunset Boulevard, local talent featured at the now-defunct Joan Wich & Co., hard-edge painting at the nascent Wade Wilson Art and the avant-garde design-minded collections at Peel Gallery and Shop.
The setting earned praise from Fodor’s as a “one-stop culture shop” featuring “top-tier” galleries. Its offerings were featured in guides to Houston published by the New York Times and Wallpaper magazine.
Now, those interested in owning the prized property can capitalize on the on-the-market art space. Over the course of the past year, the building’s ownership has passed from Chapter 11 bankruptcy to Chapter 7 receivership, resulting in a liquidation of the property’s assets.
Prospective buyers willing to put up $1.975 million can make the 12,000-square-foot space their own, taking on a handful of the city’s blue chip galleries as tenants.
The property’s financial woes stem from the previous owner, former Enron executive Jeff Shankman, 43. Construction companies Calincline and Incline Materials, to which Shankman was indebted, had been previously granted a deed of trust lien on 4411 Montrose (as well as Shankman’s South Boulevard home), and when the companies threatened foreclosure in 2008, Shankman filed Chapter 11, which was converted to a Chapter 7 liquidation in June of the following year, according to court documents.
In a phone conversation, Shankman told CultureMap that he had only been a minority investor in the property. Public record bankruptcy papers he filed indicate his self-named company, J.A. Shankman, L.L.C., acquired the property in February 2007 and maintained a 100 percent ownership and $2.2 million interest in 4411 Montrose until Shankman declared bankruptcy.
The dealing at 4411 Montrose isn’t the first instance in which Shankman has been embroiled in art world controversy. In 2008, Historical Designs, an Upper East Side Manhattan art gallery, sued Shankman, claiming that he tried to extort money from the gallery under threat of denouncing it as a peddler of forged works. According to the gallery, Shankman claimed that “Les Visiteurs,” signed by J. Lambert-Rucki, which he bought in November 1997 was a fake and demanded a more than $150,000 cash settlement (raised from an original $32,000) or else he would “go public.” The works were originally shipped to Houston from New York in 1997 in care of Enron.
While at Enron, Shankman headed trading in markets from commodities to foreign exchange and equities before the 2001 collapse. He later started a Houston-based energy hedge fund called Trident Asset Management LLC in 2006 with Andy Weathers, a former trader at CenterPoint Energy Inc. Regarding his interests in art, he previously told Bloomberg, “There’s only so much you can know about natural gas and you have to have outside interests.”
According to Historical Designs research, Enron had paid for the art as part of a corporate art collection that cost $3.5 million. Shankman, along with Lea Weingarten (formerly Lea Fastow) served on the corporation’s five-member art-selection committee.
The legal firm representing Historical Designs did not respond on the status of its dispute with Shankman, who incidentally withdrew his bankruptcy filing on the last day of July of this year. Former investors in his defunct concrete company Monotech told CultureMap that they are still owed hundreds of thousands of dollars, much of which in art collateral still in the possession of Shankman’s step-father.
The court decided earlier this month that numerous pieces of his decorative art, including a James Croak cast window, Melzer & Neuhardt Austrian lamp, porcelain jar by the illustrious Wiener Kunst-Keramik and Frank Lloyd Wright-designed pieces are to be put on auction through Morton Kuehnert Auctioneers & Appraisers. That money won’t be seen by Shankman’s former investors, however: Oddly, the auction house is claiming an unusually high 20-percent commission and two-percent fee (most auction houses would take only a seven-percent commission), with the remaining amount being used to pay court trustees.
Current tenants at 4411 Montrose say they are eager to move on.
“Jeff just wanted to refinance,” gallery owner Wade Wilson says. “He’s been very, very good to us.”
The commercial real estate firm of Chitwood Partners, LLC was chosen by the bankruptcy court to handle the sale. When asked about the building’s precarious state, both Anya Tish and Peel’s Steven Hempel expressed ambivalence, explaining that they’re hoping for a new owner sooner rather than later.
“We have no intention of moving,” JoAnn Park of Barbara Davis reiterates. “We’re looking forward to having a new landlord who may rearrange our current rules on public artwork. In its current state, it’s unfair for some galleries to present their work that may not reflect the intentions of the other galleries.”
But with the property’s financing bank’s transfer of ownership to a court-appointed trustee, the property’s parking lot, located diagonally across from the galleries at the corner of Woodrow and Kyle streets, has been cordoned off, leaving only seven spaces directly behind the building to service five businesses.
“It cuts into business because Houstonians don’t like to walk,” Wilson says.
Many galleries suffer from slower sales during the summer months, but it wasn’t until this summer’s parking debacle that Wilson identified a significant slump. He reports an estimated 70 percent decrease in traffic, receiving only a fraction of the typically-sized audiences during July’s ArtHouston event.
Conversely, Davis reports no change in gallery visitors, explaining that the galleries will be cooperating to provide valet parking during Sept. 10 opening soirees.
Meanwhile, more gallery space is slated to rise in the lot beside 4411 Montrose overlooking the Southwest Freeway. A sleek glass 13-story office tower dubbed M Fifty-Nine is planned for the site. The impact of an additional 4,000 square feet of art gallery space could fortify 4411′s offerings — or literally and figuratively place a shadow upon the bankrupt property.
Happy new owners could be on the horizon, however: Chitwood Properties tells CultureMap that there are several potential buyers expressing interest.
“Good things are happening — things are going to work out for everybody,” Davis says. “There are a lot of people with a strong interest in art in this city, who want to make sure that this building maintains its mission.”
Well this saddens me. First, I love the fact that Shankman had a gallery. I respect anyone who loves art, so that’s one for the plus column. The fact that Shankman combines both Enron and Art is just divine. And frankly Houston needs all the art and art exposure we can get.
I hope the gallery ends up in good hands.
Filed under Enron
Enron Notes
* My job requires me to analyze oil and gas companies. Basically I read everything I can on a company. I pour through financial documents, try to find trends, talk to CEOs, COOs and CFOs. I am on the distribution list of every IR department in town so I get end-of-day stock quotes, press releases, news alerts, and sometimes personal correspondence to let me know when something is about to happen. In short, I see a lot of oil and gas deals – upstream, mid, and downstream. As though it has become the standard against which all other companies are measured, I can’t help but compare every deal to something Enron did.
Something strikes me, in retrospect, about Enron’s deals. How utterly normal they were. The things that critics seize upon are so utterly mundane. The subs of subs, the cross-collateralized Raptors, the off books assets, the amounts of the deals… all of it was just completely normal for the industry.
A few weeks ago, Harvest Operations Company, which is a sub of the Korean state oil company, bought a project from its parent company for $375 million. (A great quote from a co-worker: “Hey, don’t laugh, $375 million is a lot of money for Canada.”) But this made me think of the uninformed outrage of Enron selling some assets LJM1 and LJM2. How is the Harvest deal substantially different from an LJM deal? It wasn’t. They’re identical, they’re legal, they’re done today, they’re a valuable business tool, and anyone who argues otherwise is uninformed.
*CEOs. Since Richard Grubman is retiring from Highfields, I am thinking about Jeff Skilling calling him an asshole. My observation, from talking to them, is that most CEOs and other executives are not as smooth as they’re generally portrayed or imagined to be. They’re not all Larry Ellison or Richard Branson hang-gliding into the office and doing blow off a hooker’s ass. An example: This week, an oil and gas company signed a big deal to develop shale gas. I called the CEO to talk about the deal and the conversation was like he’d never been called by an analyst before. He seemed personable enough (in a Canadian kind of way) but just… not polished.
Personally, I’d take Jeff Skilling’s style over this CEO’s. Jeff wasn’t polished either but he was engaged, active, and happy to talk to people when he had the time. He was just plain alive in a way that many business guys aren’t these days.
* My co-worker who used to work at Enron said today, “You are so go-go-go. I can see why you’d fit in perfectly at Enron.” Greatest compliment of my life. Of. My. Life.
* I have an idea for a new business line, which I’ve discussed with my co-worker. It is basically doing the Nigerian Barge deal over and over and over. I rock.
* Some nights, long after the immigrant maids have gone, and the city is full black and outside my window, the lights are up and flickering like a cat’s eyes, I will realize that I am all alone in the calm, protected world of my office, like a netted fish. Then in the reflection of the glass, I will notice that I am wrong. A guy from the brokerage side comes slinking through my side of the office, looking for the kitchen, or maybe just checking out who’s still at the office. The brokerage guys are easy to spot. They wear shirts that are rolled to the forearms and their ties are askew. They are always walking fast and they look frustrated, they mutter to themselves like homeless veterans, they pause, looking into the office, and say with a little wonderment, “You’re still here?”
Glare-lit, without the requirement of any expectation, I suddenly see something beyond the gross physical. I see a power of imagination, will, endurance. It is almost not of this world at all – a ghost carrying messages of progress. It is the impulse for success, for being alpha, and is still alive. It is ridiculous but I feel suddenly so grateful for the concept of capitalism and for what it turns people into that I could fall to my knees in gratitude.
“Yes. I’m still here.”
Filed under Enron
Upcoming
My new job is keeping me busy. So busy, in fact, that I’ve barely had time to sleep. But I plan to carve out some time on Friday for updates. I want to write about Skilling’s appeal for bail. And Kevin Hannon: I haven’t really talked much about Kevin Hannon. He’s a complicated guy, so I think I was waiting until he became more clear in my own head before I jumped into that topic. I also have been dying to write about Osprey. And I have some more of Ken Rice’s funny emails to share. And maybe some more documents. And this was the year I was going to document in minute detail (as part of Today In Enron History) the last days of Enron beginning with Jeff Skilling’s departure on August 14. But it is clear I simply won’t be able to do that; I’ll save it for 2011. But I might be able to squeeze in a few things that you’ve never seen or heard about before from those last days.
So all that’s upcoming, if I can ever get out of my office before nine in the evening.
Filed under Uncategorized
The Defense of Cliff Baxter
I received numerous emails from people eager to give me their insights about Cliff Baxter after my previous post about him. One of Cliff’s best friends, in particular, described a man who was funny, generous, and kind. But also moody, arrogant, demanding and short-tempered; this friend agreed that it would be a horrible fate to work for Cliff Baxter. But his lasting affection for the man was obvious. Obviously to have the respect of a man like this one, Cliff would have had to be pretty amazing. I have no doubt that he was.
Incidentally, the accusation of arrogance never really bothers me. I wish some of the Enron executives were *more arrogant*. It would convey the knowledge of how significant their intelligence really is. Instead, most of them schlep around like average joes, totally clueless as to their awesomeness. The Enron executive I know best is the most non-arrogant person you could ever hope to meet. He is so ordinary and approachable, you’d never guess that he’s also the most brilliant person in the entire universe.
So good for Cliff, having an edge to him. Had he lived, I would have liked to have known him. It is important to have difficult people in your life. They make you stronger. They certainly make life more interesting – and I have no doubt that all Cliff’s friends would agree that he did just that.
He remains deeply missed.
Filed under Enron
Cliff Baxter As A Boss And Other Enron Notes From The Office
One of my colleagues at my new job used to work at Enron, in Cliff Baxter’s group. When this was discovered, joy ensued. We sat at my desk for fifteen minutes playing “Who do you know?” and “What did you think of so-and-so?”
After we talked about the awesome Ken Rice (he seemed to respect Ken), he asked, “What did you think of Sherron Watkins?”
I had to laugh. When I was interviewing for my current job, my boss asked the same question. I must have had a guilty look when my boss asked because he laughed and said he didn’t like her either. He knows her husband. He said her husband is okay but she’s …. not so much.
So when my coworker asked, I hedged, and then asked him what he thought. “That memo she sent Ken Lay?” he said. “That was blackmail. Everyone in my group thought it was blackmail. That was the only way to read it.”
I literally jumped out of my seat at that point and yalped, “I could just hug you for saying that!” I totally agree, and we spent a few minutes talking about that.
After we talked about Sherron for a while, we talked about Cliff Baxter.
I never knew Cliff, but I know him, somewhat, through his friends. I said, excitedly, “What was Cliff like to work for?”
Then he shocked me. He said that though Enron was full of arrogant people, Cliff was the most arrogant. He would be in a meeting and just stand up and say, “I am the smartest guy here,” and walk out. He said that Cliff didn’t wash his hands after he used the bathroom. He said that Cliff was just a jerk.
My coworker does not seem the hyperbolic type. He is very calm and very composed. When I was getting stressed the other day, he just smiled and quietly said, “Don’t get stressed.” He just doesn’t seem the type to be unkind for no reason, or the kind to exaggerate. So when he said it, it had the ring of truth, as disappointing as that is.
After a while, my coworker asked if we could have lunch next week to talk about Enron. You can imagine my response.
I’ve been mulling his words over for the last few days, trying to integrate them with everything else I know about Cliff Baxter. Was he a jerk? I accept that he was arrogant; many Enron executives had a very high opinion of themselves, but it was part of the culture. Enron hired smart people; most smart people know they’re smart – arrogance is the cousin of confidence.
Maybe after next week’s lunch, I’ll have a better idea about Cliff. Or maybe this is the complete picture of him. Maybe a little uncertainty is okay.
Filed under Enron
Richard Grubman To Leave Highfields Hedge
The Boston Globe reports:
Richard Grubman, the Boston hedge fund manager best-known for a testy confrontation with Enron’s chief executive before the energy company’s collapse, is retiring from the firm he helped to create 12 years ago.
Grubman’s departure from Highfields Capital Management was disclosed today at an internal meeting and in correspondence to investors. Co-founder Jon Jacobson will remain at the firm.
The 48-year-old Grubman told colleagues he had been working in the investment business for 26 years and looked forward to spending time on personal pursuits. His wife, Caroline, was diagnosed with breast cancer last year.
“Personal pursuits” and “spending more time with family” were the two reasons that Jeff Skilling gave for leaving Enron. He said at trial, “my head just wasn’t in it anymore.” And now Grubman is claiming pretty much the same thing. I sniff a trace of irony.
He and Jacobson were known within the financial world as aggressive investors who challenged executives at public companies. Grubman in particular is known for his exchange in 2001 with Jeffrey Skilling, then Enron’s CEO, during a conference call between the company and its investors. Enron had failed to produce a balance sheet with its other financial data, prompting Gruman to persistently question why the company was unable to prodive basic information. Eventually, an exasperated Skilling called Gruman an obscene name on the call and moved on.
How proud Grubman must be. Jeff Skilling calls you an asshole on a conference call and it’s the highlight of your career.
Enron filed for bankruptcy eight months later, leading to one of the most spectacular collapses in recent Wall Street history. Skilling is serving a long prison sentence for related fraud and insider trading charges, though the US Supreme Court vacated part of his conviction in June. Highfields had been short Enron stock, betting it would decline in value, at the time of the conference call.
Grubman and Jacobson, who was a high-profile investment manager for Harvard University’s endownment, created Highfields in 1998, with Harvard among its clients. Since the inception, Highfields has earned an average annual return of 12 percent while the Standard & Poor’s 500 index averaged 2 percent annually. It had $9.8 billion at the end of the second quarter.
In April Grubman was arrested and charged with assault and battery after he allegedly threw his car keys at a valet at the Ritz-Carlton in Boston. The case is pending.
Filed under Enron
UK Guardian Publishes Snarky Article About NatWest Three
The UK Guardian has published an article with a rather snarky tone about the NatWest Three, which I will now dissect like the frog in seventh grade biology class.
They became poster boys for City fraud when they confessed to stealing $7.3m in an Enron-related fraud. But the convicted British bankers once dubbed the “NatWest Three” are now recanting their guilty pleas, claiming that they were extracted under duress by a flawed American justice system.
I suppose I should be flattered that the British press seems to insinuate that the possibility of being forced by the American justice system into confessing to a crime one did not commit is beyond the realm of reality. However, I am ashamed to say that in the USA, most of the men and women in prison are in there because of plea deals.
Recently released from prison after serving half of their 37-month jail sentences for a scam dreamed up with corrupt Enron executives, two of the NatWest Three, David Bermingham and Gary Mulgrew, are far from remorseful.
God, I love the Brits.
They have launched a ferocious attack on their controversial extradition from Britain to the US in 2005 and subsequent imprisonment, claiming that they only admitted fraud in order to get home as quickly as possible after frustrating delays in their criminal trial.
I spoke to one of them who said even in prison that his situation was completely ridiculous and he was innocent. I found that refreshing because everyone else I’ve spoken to in prison does the whole “I am pretending to be remorseful until I get out of here” dance. And if they say anything that would violate their agreement (which almost universally say that they are not allowed to utter one word in contradiction to the plea) they will be punished for perjury. I love that the NatWest men are angry and vocal about their anger. They should be mad.
In a two-hour-long video on the website Ungagged.net, which is dedicated to exposing “prosecutorial abuses” in the Enron saga, Bermingham has compared the US system of plea bargaining to “Stalinist Russia”, while Mulgrew asserts his ordeal was akin to “torture”.
Wait. Why the scare quotes around “prosecutorial abuse”? And I agree with Bermingham and Mulgrew that the entire situation showed the very worst of our monolithic justice system.
“They ripped me away from my home country, away from my family and friends,” said Mulgrew. “Torture takes many forms. They delayed the trial, delayed the trial.”
Bermingham and Mulgrew, along with a colleague, Giles Darby, were at the centre of a furore over Britain’s extradition treaty with the US that sparked questions in parliament and a march by business executives on the Home Office .
The trio persuaded their employer, Greenwich NatWest, to offload a stake in an Enron-related investment venture in the Cayman Islands for a rock-bottom price of $1m. Unbeknown to NatWest, they held a stake in the purchaser, through a deal cooked up with Enron’s then finance director, Andrew Fastow, and the conspirators sold on the investment at a profit of $20m.
This is written as the Official Story and it simply isn’t true. It’s mocking the seriousness of the trouble these men have faced.
Pleading guilty in front of a Texas judge in February 2008, the British bankers delivered grovelling apologies. Bermingham said his conduct “fell well below the standards expected” while Mulgrew accepted that an offshore transaction in the Cayman Islands “lacked integrity”, adding: “I apologise unreservedly for my actions.”
It pains me to think of them – or any of the Enron executives – apologizing for something I know they did not do. Ken Rice’s “I am ashamed of my actions… I was not raised that way,” haunts me. All of the apologies are just painful and horrible because they’re being forced to accept the burden for something they simply did not do. I am sure it was painful for them to say those things. But it is also painful to hear them.
But the men now say that their confessions were drawn out of them by the pressure of extradition to the US and a two-year hiatus in Houston with little money and minimal family contact.
Gee… ya think? You think maybe these men might have a point?
Bermingham said he feared a mistrial if a jury failed to reach a majority verdict, further prolonging the trio’s stay: “On the one hand, we were going to be able to show without any shadow of a doubt that the government’s case was bullshit. On the other hand, we were three greedy foreign bankers who’d done a deal with Andy Fastow and made $7m bucks. And you’ve got yourself a mistrial.”
Bermingham need only examine the Broadband case for a picture of what a mistrial or hung jury looks like in the USA. Rex Shelby, now gone from Enron for eleven years, has been prosecuted for nine. He’s been tried, been acquitted and some counts were hung. To the Fifth Circuit innumerable times, to the Supreme Court twice. And he’s going to trial again. An even more extreme example is Kevin Howard, another Broadband defendant who was tried twice and was set to go for a third time when he finally said enough was enough. If there is any comfort at all that I can offer Bermingham, it is that he was correct; a retrial would have been hell. He is home in Britain now where he belongs. He did the right thing – even if it was horrible that he had to be put in the position of doing it.
He added: “The government made it clear to us that if we agreed to plead guilty, they would recommend that we got sent home under the prisoner transfer treaty so that we could spend a good proportion, if not a majority, of our sentences in the UK where would could be close to our wives and families. But if we went to trial and lost, they said they would ensure we spent all of our sentence here [in the US].”
As part of their sentence, the trio were obliged to pay back $7.3m to Royal Bank of Scotland, which now owns NatWest. An RBS spokesman said they had reached a settlement: “The dispute between the parties has been resolved pursuant to an agreement, the terms and conditions of which are confidential.”
The US department of justice declined to comment on the bankers’ remarks.
The trio are now trying to rebuild careers in Britain. The men’s solicitor, Mark Spragg, said there were ongoing contentious cases of British business executives being extradited to the US, including a former boss of the Morgan Crucible engineering group, Ian Norris, who was sent to the US for trial in May.
“There’s a real issue here that businessmen being sent to America are under immense pressure to plead guilty to something even if they don’t feel they are guilty, because it’s the quickest way to get out of the system,” said Spragg.
It’s not even about “feeling” guilty. It is about knowing, objectively and without reservation, that your actions did not violate any law and that you are being pursued not in the interest of justice but in the interest of becoming a trophy for an attorney who wants more than anything to advance in her or his career, and you are the way to do it.
By cynical about the media reports. Don’t be cynical about the men – like Bermingham and Mulgrew and Darby – who were too innocent to even fathom that would end up in Texas, in prison, and we would know them as the NatWest Three.
Filed under NatWest Three
Perhaps I Wasn’t Clear About My Position On Enron
I’ve just started a new job so blogging will be light for a few days. However, I wanted to share an email I received this weekend. In its entirety:
Hi Cara,
I am doing my postgraduate thesis on Enron and Creative Accounting, I was wondering if you could point me to some direction.Thanks
[Name withheld]
My reply:
Hello [name],
I don’t know if I can help you. I have never really understood the term “creative accounting”, particularly as it seems to have been applied by some to Enron. While you might argue that Enron sometimes used “sophisticated” accounting methods, most of their accounting methods and processes were common to the industry, even mundane. And all were approved by waves of internal and external accountants.
Honestly, I think a more interesting thesis would be “The Myth of ‘Creative Accounting’ at Enron”. I think that would lend itself to a much more interesting and insightful analysis.
Sorry I could not be of more assistance. Best of luck with your thesis work!
Cara
This is actually pretty common. I once received this email from a salesperson:
Hi Cara,
CNBC is showing an Enron documentary of some sort tonight around the book “ The Smartest Guys in Room” ( who now happen to be dead or in jail, not so smart after all), and I thought there may be a resurging interest among individual investors around earnings quality and other concerns in the current economy.
I have attached an Enron report and the article beginning with the italicized sentence below that underscores the technology in Sageworks, Inc.’s accounting applications that are designed to surface inconsistencies in financial statements and accounting reports.
The public company analysis reports at Sageworks, Inc. are written in plain language, and are intended for individual investors who want to decide how a company is doing outside of broker or analyst reports that may be inherently biased. http://www.profitcentspublic.com
The plain language reporting is aimed at the investing community who may not have any formal training in finance and need the details explained in the simplest of terms, regardless of their vocabulary building progress while reading from “investopedia” or other informational sites.
If all financial analysts crunch the same numbers from the same income statements, why do they reach such vastly different conclusions about a stock’s outlook? That’s a question faced by Brian Hamilton, founder and chief executive of Sageworks, a financial analysis software firm. His technology’s designed to provide a more objective view to investors — no small task, Hamilton says. “Everybody …
Also, The following article from http://www.smallcapinvestor.com also looks at Enron here on March 9, 2010 regarding the anniversary of the stock market low of 2009.
Best regards,
[Name]
Um… What?
The lesson here should be obvious. If you’re going to google for information about Enron, and you find my blog, make sure you understand that I am arguing that there was no fraud or conspiracy at Enron. I can’t help explain “creative accounting” because while I respect the brilliant minds at Enron, they didn’t invent new accounting. And while I am happy to look at any Enron document you send as long as it’s not conspiracy stuff, I’m not going to agree if the conclusion is Enron was corrupt.
A little research will go a long way.
Filed under Enron
Ungrateful Masses
I tend to run the same route every day. I run through my neighborhood on a two-mile loop, and sometimes add a few more miles by running up to the Transco Tower and back. One evening several months ago, I realized that I had begun to notice a car outside of a certain house every day. It was there when I ran in the morning, and it was there when I ran at night. The car changed. Sometimes it was an SUV. Sometimes a sedan – blue, then maroon. After I realized that I had grown used to seeing a car – with its running lights on and often the motor going as it loitered by the curb outside a beautiful house – I began to pay more attention to it. So one early evening as I jogged up the street, I saw the familiar car. This time, as I drew near, I took a closer look at the house. And I noticed the poles on the roof and the cameras.
For whatever reason, I decided I needed to see it again, but I couldn’t just walk back. Indeed, that would stir the curiosity of the dude in the car, so I turned right, then right again, and right again, and started again down the long street.
The car was in the place where I’d last seen it, and it was just after sunset. As I jogged, a woman and a man were in the drive way and the man turned and I glimpsed him. He smiled and said hello. I said “Hi,” and kept running.
It was only later I had placed his face. I had seen him on television for the last two months. It was a BP executive.
Suddenly I felt so sad. I felt sad that he had to hire someone to watch his home in case the mob showed up with torches and pitchforks.
Jeff Skilling’s house did not have a gate around it. He did not want to live behind a gate; he was not the type. He resisted until the death threats became too frightening, then h erected a tasteful black gate.
On this subject I am painfully ignorant; I simply can not understand the mindset of someone who would hate an executive who is working so hard to create jobs and wealth. In one aspect I think BP’s situation is even more awful than Jeff Skilling’s. Everyone agrees that the BP oil spill was an accident. Nobody inside the company was sitting on his hands. With Enron, there was a mistaken belief that Jeff Skilling had done something criminal.
How awful that we’ve become so suspicious and distrustful of the men who work so hard to civilize us. Without them, we would be nothing. We would have nothing. I am thankful to Jeff Skilling, Tony Howard, and every other misunderstood executive who has made our way of life possible.
Filed under Enron
Jeff Skilling’s Opening Merits Brief On Remand
I haven’t read it yet. Comments upcoming.
Filed under Enron
Googling Jurors: An Ethical Dilemma?
Paralegal Gateway has an intriguing article about the ethics of googling a juror either during voir dire or later, on the attorneys’ own time or during breaks. It’s a fascinating aspect of jurisprudence.
Personally I think it is a great idea. I think in all three Enron trials (Corporate, Broadband, Nigerian Barge), the official records show a very unambiguous bias against the defendants. In many cases, potential jurors would say they hated Enron defendants for what they did, but then promised the judge they could be fair and impartial jurors. After the Skilling / Lay trial, one juror said that she wanted to serve on the jury because she “wanted to know why they did it.” Not *if* they had done anything all, but why they did *it* – whatever the “it” was in her head, and almost certainly not the “it” written inside the four corners of the indictment.
Imagine if the attorneys had been able to Google them and see if they had a record of Enron-hating all over the internet. Or if they’d found out something else that would have given them cause to dismiss a juror instead of trusting that they could be fair and impartial even while proclaiming their hatred of the defendant.
Wouldn’t it be awesome if I were called to be a juror on Rex Shelby’s or James Brown’s or Jeff Skilling’s next jury? If that happens you can be sure I will delete this blog faster than you can say, “Not guilty,” and I will do the reverse of what the other jurors did: say I can be biased against the defendants, if only I might serve.
And then I’ll bat my eyelashes sweetly and try not to look like the cat that ate the canary.
Filed under Enron
