Enron in England (And The Queen)

I walked by the old Enron building here in London and there was no trace of it. No icons, no symbols anywhere. It is now a modern white building with a juice shop on the street level. A very handsomely dressed gentleman who could be nothing but security for the building was eyeing me closely so I put on a charm offensive, smiled really big, and walked right up to him.

“Is this the old Enron building?” I asked, conjuring a bit of Texas in my voice.

“Yes ma’am,” he replied and proceeded to tell me how utterly NOT present the company was at that location anymore. “Every trace, gone!” He said.

“Yeah, I see that.”

“Every bit, wiped right off.”

Got it. I took this picture before I left:

Then I walked by Buckingham Palace and happened to snap some amazingly excellent photos of the Queen and Prince Philip arriving in their Rolls Royce. This is one of them.

The Not-Very-Well-Thought-Out Enron Conspiracy

The fever swamps of the Democratic Underground are usually too foul to bother with, but today this was called to my attention. It is possibly the world’s worst thought out conspiracy between Enron and Jeb Bush/State of Florida.

Jeb Bush was Governor of Florida from January 1999 until January 2007.

How can you be sure? Maybe that’s what they want you to think.

He enjoyed deep and long-standing political ties to Enron and Ken Lay, benefiting from Lay’s lavish gubernatorial campaign donations as Jeb worked outside of the public view to further Enron’s interests in the state of Florida, which, at the time, included Enron’s scheme to help pay for Everglades restoration in exchange for water rights.

You need an editor to clean up these run-on sentences. The Man is still keeping you down. Anyway, how is it a scheme for Enron to pay for something and get something back?

Enron also had plans to deregulate Florida’s electrical markets and to build more power plants in the state.

Heaven forfend.

Before Jeb Bush became governor, Enron had already started steering money to Florida legislative House races in 1996 and 1998, with most of it going to Republicans.

The horror!

As Governor, Jeb Bush was one of three trustees of the Florida Retirement Pension Fund, and acted as chair of its oversight board. Alliance Capital Management’s money manager, Alfred Harrison, was repeatedly investing Florida’s pension funds into Enron shares in 2000-2001, and, shockingly, continuing to do so in 2001 until Enron was just days away from plummeting into bankruptcy.

Newsflash: This describes most institutional investors experience with Enron.

Florida’s pension fund lost $335 million from its Enron holdings, leaving thousands of retired Enron employees’ shares worthless.

Thank goodness it was only in Florida. Would hate to see it happen in Texas, Wall Street, etc etc.

And Jeb waltzed away. Thus far.

Hahahahh! Again, what is with the horrible writing? Look, in order to formulate an argument, you need to connect Jeb Bush to Enron. You didn’t. You make the point that Florida, like many places, experienced the pinch when Enron collapsed. Big whoop.

Then the whole conspiracy just gets ridiculous with the writer accusing Lehman of shorting Enron, though Lehman bought shares. It’s just weird and sad and anyone with an iota of critical thinking would look at these clowns with a frowny face because they’re just too stupid to live.

Results of Carl Bass’ Appeal With The Texas Board of Public Accountancy

I haven’t read it yet but the opinion can be found here.

London Calling

I’m heading to London on Tuesday evening. I have no idea if I’ll be blogging while I’m there or not. I’ve been promised a trip to Enron’s Grosvenor Square building where the iconic E is still carved into the facade of the building. I will definitely take pictures and post them here. Otherwise, I’m not sure how much I will have to say about Enron. It is entirely possible I’ll be madly inspired and out will come long, complex Enron essays, spilling forth like a Roman aqueduct each evening. But who knows, I can’t predict it.

The Enron Nightmare

Y’all, I try so hard to be nice but people like this crop up and really try my patience. It’s kind of funny, but it’s also… not.

So:

We’re fast approaching the 10th anniversary of the Enron fiasco – when investors got a big wake-up call and realized that they’d best start taking a closer look at corporate financial statements.

Really? When will we reach it, I wonder? Because for the rest of the world, it was December 2011.

Anyway, investors know they have to look at financial statements. That’s sort of the definition of an investor isn’t it? One who invests in companies? What do you think, people just throw money at a company because they have a nice office building? If someone does that, it is the investor’s problem, not the company’s.

Since elementary school, most of us have been programmed to trust authority.

Hahahahahahahahahahahahahahahahah

Hold on a sec.

Hahahhahahahahahahahahahahhahahahahahahhahahahhahahahahhahahahah.

As we grew up and ventured out into the world, that old trust program automatically included “authoritative” paperwork, like annual reports and financial statements. Now we know that this trust is not always well placed.

So you never learned critical thinking skills? And I never “automatically” trust anything. If you do – and I believe I see where this fetid, effete argument is going – the consequences of your “programming” (again, I repeat: hahahhahahaahha) are your own stupid fault. Idiot.

Before Enron’s downfall, the average investor never gave much thought to the validity of corporate financial statements.

Oh really?

It was simply accepted that all the big-name auditing firms were doing their jobs. After all, the “Big Eight” – then later reduced to the “Big Four” (PricewaterhouseCoopers, Deloitte and Touche, KPMG, and Ernst and Young) – accounting firms that “independently” examine and certify these financial records, were considered squeaky clean and above reproach.

Lady, you’re an idiot.

But as people watched their life savings in Enron holdings evaporate,they were stunned to discover something else – an auditing firm can serve corporate clients in other capacities, and even share office space.

That isn’t stunning news. In fact, it’s extremely common. I get the feeling this person has not been in public since 1964. And if it is so stunning, why?

When auditing firms increase their own bottom lines by tweaking the numbers of the very clients they audit, they cross the line in a major conflict of interest.

So… are you claiming Arthur Andersen “tweaked” Enron’s numbers? How did it do that? No answer? Oh.

Even after Congress finally passed the Sarbanes-Oxley Act of 2002 – legislation that imposed much stricter guidelines for auditing firms – James R. Doty, the new chairman of the Public Company Accounting Oversight Board, discovered audit failures as recently as 2011. They were of such significance that PCAOB inspectors concluded the auditing firm had failed to support its opinion.

This is clearly a person who believes legislation solves all problems. After all, murder is against the law and clearly nobody has ever been murdered.

All of this uncertainty places the burden of due diligence and scrutiny squarely on the shoulders of investors or their advisers, and further reminds us to pay heed to the old caveat “buyer beware!”

What uncertainty? And yes, I agree that the burden of due diligence is only on the investor. Who did you think should bear that?

An annual report can be a powerful and informative tool to help understand a company’s financial position.

Has anyone ever told you you’re a terrible writer? Because you are. You’re not fleshing out a single idea before jumping randomly to the next half-formed idea.

But to the untrained eye, these documents just appear to be page after page of complex numbers, fluffy text, glossy full-color photos, and the usual upbeat “Message from the CEO.”

Sure, if we’re all five year olds who are “programmed” to trust, sure, that’s maybe what you see. But if my money is going to a company, you can believe I’m watching them like a hawk. And seriously, do you always speak this condescendingly to your audience? “Complex numbers”, “fluffy text”?

Financial statements are expected to be straightforward summaries of what actually takes place in a corporation.

Really, because I thought they were legal documents giving a snapshot of exact credit/debt and cash positions of companies. “Straightforward summaries” of what takes place in a corporation can be included, but financial statements have to show some actual numerals.

But the method of reporting those numbers is anything but straightforward.

So now we’re talking about the method of reportage? What about the “trust”! What about the auditors who office with their clients?! What about… I guess we’re not talking about those things? You’re just randomly spitting up words…. sort of… “fluffy text” maybe?

That’s because auditors and accountants have a variety of choices allowable within the Generally Accepted Accounting Principles. These choices relate to handling of certain transactions, reserves and the timing of recognizing those transactions. This can present a dilemma for the average person who just wants to know what all those numbers mean.

If this person were standing in front of me, you’d have to physically restrain me from slapping her in the face for her stupidity.

Footnotes provide narrative details that go beyond the numbers and help explain the accounting assumptions used in the report. But the footnotes can be highly technical and difficult to understand.

Only if you’re an idiot, like you.

Even if you have done your homework and have a fairly good grasp on reading financial statements, never base investment decisions on a single year of outcomes.

Who does this?

And are you saying Enron investors did? Or do you even know what you’re talking about? I think not.

The most relevant information can be found by reviewing information that’s been reported over several years. The most recent five or even 10 years worth of results can give you a better picture of a company’s financial strength, earnings, and its ability to compete.

Wow, such blazing insight. How come you’re not rich yet with your innovative thinking?

How does one get past the hype and the corporate public relations machine and drill down right to the heart and the meaning behind the math? There are plenty of books on the subject that explain how to read and understand financial statements. But if you don’t want to attempt navigating those waters alone, meet with a trusted financial adviser able to guide you through it.

What the hell did I just read?

Judith McGee is the chairwoman and CEO of McGee Financial Strategies Inc., an independent registered investment adviser. She is a co-branch manager of, and offers securities through, Raymond James Financial Services Inc. in Portland. Contact her at 503-597-2222 or judith@mcgeenet.com.

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Enron Without Euphemisms

Say what you will about Rick Santorum as a presidential candidate, he definitely has changed the political climate. Before Santorum, we were discussing important things like the fact that the economy is still in the bucket and unemployment is sky high. But since he entered the race, social issues have taken over and the subject is fucking. Who is fucking who, how they’re fucking, what we should think about them fucking, and how to avoid the consequences of fucking. Besides being a terrible waste of time and distracting our country from the real issues we should be focusing on, the entire abortion debate is based on euphemisms and evasions. And that is what we’re talking about, isn’t it? The “aspirin between the knees” comment, the Komen/Planned Parenthood kerfluffle, the current brouhaha over forcing Catholic organizations to buy birth control, etc. All this talk about “women’s health” and “reproductive rights” is basically just providing political cover for abortion.

The fact that the pro-abortion people need words like “women’s health” to discuss abortion tells me they fear the actual discussion of abortion. The abortion lobby enjoys finding the statistical outliers, such as fifteen year old rape victims, to explain why abortion is so necessary. But the fact is, if they want to support abortion, they should at least have the moral courage to say: We support abortion because we enjoy hot, steamy sex and we want to be able to avoid the consequences of an unintended pregnancy. I would have more respect for that position since it doesn’t buy into sex shame. It doesn’t seek the sympathy of its opponents as does the “fifteen year old rape victim” or whatever who, ostensibly would never think about having sex because she’s an innocent victim and her pregnancy had nothing to do with the need to be penetrated. It is a very pro-woman message. Though I do not believe in abortion in any circumstances, I could better support the abortion people if they’d quit with the prudish, scolding tone that they accuse us pro-life people of adopting and just say girls like to fuck too and we don’t wanna have a baby. That’s a totally legit position. Sheila and a few others might remember my CGWLTF organziation from 2001. Conservative Girls Who Love To Fuck. There’s no shame in it. Just say what you mean and mean what you say.

The abortion discussion is surrounded by linguistic and logical landmines. For instance, Bill Clinton once said he wants abortion to be legal, safe and rare.

Well, why should it be rare if there is nothing wrong with it? Even the abortion people seem to accept by default that there is something craven about their position. If they’d just say, “Yes, we accept that the glob of cells is indeed a baby, but we want don’t want to be the mother to that baby,” I’d have much more respect for them – it would at least show they’re thinking. They’re being honest.

But the abortion debate refuses to acknowledge the sex drive of women, and as long as it does that, it will be controversial.

The only thing at least as controversial about sex – particularly women’s attitudes about sex – is money.

We are a decade into the Enron discussion and certain lies are starting to ossify into the culture, and as long as we let those lies continue, we’re never going to understand what happened at Enron. The discussions are starting to be layered in tulle fog so thick you can’t really see the edges anymore. And I think people – the ETF, journalists, and bystanders – tend to like these sweet little lies that make the discussion of Enron more palatable to the general public. So much easier to discuss Honest Services if we don’t have to discuss the morality of someone like Jeff Skilling. So much more enjoyable to talk about the Enron execs went to prison than to question whether they were actually guilty of anything.

Ken Rice’s Ferrari is a perfect example of what I mean. When he was testifying during the Skilling/Lay trial, the mention of his stupid Ferrari was de rigueur in any report about his testimony. Why? Because the Ferrari is shorthand for “rich” and the fact that he was testifying against Skilling and Lay meant that he was that most beloved of all American characters, the redeemed bad guy. He might drive a Ferrari but at least he had it taken away from him so he’s not quite so rich anymore. See, he’s just like us!

The discussion about Ken Lay’s condo and his vacation homes accomplished the same thing, but since he was still in possession of those things when he passed away, he was just a bad guy. A rich bad guy. But at least he was dead so the government still won.

I believe that like the abortion debate is really hiding the central fact that women love to fuck – a fact that is not quite polite to mention – the debate about Enron disguises a deep vein of hatred for rich people. It is class warfare, and every other vocabulary term, rhetorical device, and lie is in effort to both reveal the fact that the executives were rich while also making it socially acceptable to hate them for some other reason, such as “honest services fraud” or “conspiracy to commit wire fraud.”

Those things didn’t happen. The evidence bears that out.

Class warfare and the decades-long demonization of business executives culminated in a witch hunt. Historically, in witch hunts, something has happened which have the people frightened. In the Salem Witch Trials, recent vicious Indian attacks and burgeoning political fighting between groups, had everybody ready to believe in witches. In the Inquisitions, a horrible plague and constant warfare made the people willing to believe that witches were causing the problems. With McCarthy, a world war and the specter of the nuclear bomb, made people willing to believe that commies were sneaking around everywhere.

Enron occurred before the public was aware of how fragile trust-based financial organizations are. It occurred right after the trauma of 9/11 and during a time when big business had been routinely demonized for decades. When Enron, the 7th largest company, went bankrupt, the government was desperate to show people that such a thing could not happen in America. So the government determined that it had to prove that a large American corporation could go bankrupt only through criminal activity, not through the normal play of market forces and business decisions. If Enron had occurred a few years later, Enron might have been bailed out by the government — instead, the government tried to placate the fear of the masses by accusing innocent people of criminal wrongdoing. It was a nearly classic witch hunt.

We cannot trust the Feds to do the right thing, and (worse) we cannot trust the press to be the watchdog of the people against the state. When the press supports the state against the individual, you have a scary and dangerous situation. And that is what has happened with the Enron cases. The more journalists write about the collapse, the more obfuscation surrounds the reality of the situation. Instead of illuminating what really happened, they only add to the body of acceptable truths – that’s why you know that Ken Rice had a Ferrari but you can’t tell me without googling what he pleaded guilty to.

Bill Collins Reports On His Coworkers For The ETF

The Enron Task Force preyed on the weak. That’s one reasons they glommed onto Bill Collins as a potential witness. He had mental health issues and was seemingly easy to manipulate. John Kroger recruited Collins to give up whatever dirt on his former coworkers that he could. Here is one of Collins’ reports to Kroger.

Tony Canales on Bill Collins

This is part of the transcript of Tony Canales’ closing arguments. I found his comment about Bill Collins funny. “I don’t even want to hold your hand.”

After The Strip Club

OMG, Nicky probably hates me because I totally ruined the car ride home. I hope the memory of singing “Express Yourself” by Madonna was just a fantasy and not actually fact. My girlfriend is so hot.

Wow.

The problem with most bitches is that they went to law school.

I love you.

First & Last Drunk Enron Post

1. Red Bull and Vodka.
2. About to head to a strip bar with some friends. I am apparently reclaiming my youth as a dude.
3. I am wearing eyeliner for the first time in, like, fifteen years. I feel like a harlot.
4. Which is kinda cool. Tell me I’m a bad girl.
5. Big is currently obsessed with Hoodie Footies. Google it and then shiver in fear. He keeps making fun of them. I’m starting to think he’s protesting too much. I almost bought him one for Valentine’s Day. Almost. But the thought of that horrid thing entering my sacred threshold is too much for this simple country girl to bear.
6. One Enron dude is about to have a baby! So so so happy for him. He deserves happiness. XO!
7. I had an argument with a CIA psychologist about Jeff Skilling. I have a feeling there is a file with my name on it somewhere in Washington DC.
8. An Enron executive introduced me to Red Bull and Vodka. This is his fault.

The Fifth Beatle and Enron

Seth Godin is considered a marketing genius – and I admit I receive and read his posts every day via email. I have exchanged a few emails with him and always found him genuine and interesting, just like his columns. But today he wrote something that really resonated with me. I quote:

The fifth Beatle

It’s an insult. If someone (who isn’t John, Paul, George or Ringo) calls you a fifth Beatle, they’re not being nice.

For fifty years, people have been proclaiming that they’re intimates, part of the story, a key component of the success of the Beatles… Just as there are people who would like you to believe that they were instrumental in this startup, that project or the other initiative. Success has many parents, failure few.

Here’s the deal: you don’t get to be part of the success narrative unless you were fully exposed if there was going to be a failure narrative instead.

Innovators need your support, without a doubt. But if you want to be a Beatle, start your own group.

My first thought went to Sharron Watkins, of all crazy people. I was thinking how she wanted so badly to be seen as the “mother of Enron’s failure”, the architect who brought it all down. And yet she wanted no part of Enron’s success. This is literally the only case I can think of in which there is more leverage to fail than to win.

The Enron story is full of reversed “fifth Beatles”. There are people who make quite a good living traveling round the country, proclaiming from the rooftops that they saw how corrupt Enron was, that they were responsible for the collapse of Enron.

And yet the people who have something to be genuinely proud of are considered the bad people. Those who birthed and nourished the company, who produced magnificent technologies and intriguing new ideas, are considered criminals. They now live quiet lives, distancing themselves from Enron and its accomplishments, as if that era of their past is something to be ashamed of.

It is really heartbreakingly sad that the Enron story has become a negative of the norm. The truth is that those men who built Enron are heroes. They should be venerated. Those who seek acknowledgement for bringing the company down are parasites. They’re the Fifth Beatle and it is disgusting.

In Praise of Stability

Big is a man of habit. He wakes at exactly 5:50am no matter what. He is in bed by 10:30pm. He eats breakfast, lunch, and dinner (he is not much of a snacker though he can be tempted, on occasion, by sweet things.) On Saturday he takes care of household errands, including grocery shopping, laundry, and other household miscellany.

He has kept this schedule since the day I met him. It amused me and fascinated me when I observed it. How could he stand it, I wondered. How could he live like an automaton?

My ignorance about his nature was blessedly short-lived. I came to see that the routine supported the adventurous person he really is: the brilliant, blowing-out-the fuses creative genius. Furthermore, when framed through the Enron prism, I’m amused to discover that he shares this consistency with other executives.

I have received emails from Enron executives timestamped 5:30am on a Saturday.

Enron Email Research Now Reveals Who Was CEO of Enron

I know, I know. It’s a huge shock to discover who was the boss at Enron, so please repair to your fainting couch when I reveal that it was Jeff Skilling. It only took ten years of research into Enron’s emails for this gem to be revealed.

I think researchers like these folks are trying too hard to find something interesting about the Enron emails. In this case, the researchers are attempting to create “smarter messaging software”. What that means in practical terms is rather boring: a piece of software could prioritize your emails based on the words used in them.

You know, like Google does right now.

For Eric Gilbert, assistant professor in the School of Interactive Computing at Georgia Tech, the email database has shed light on which words are used most frequently in messages going up and down the corporate hierarchy (and yes, a conservative approach and many filters were used to ensure the types of messages examined would apply to a typical organization, not just a fraudulent one).

The top 5 “upward predictors”found in the Enron corpus were “the ability to,” “I took”, “are available”, “kitchen”and “thought you would.” Words/phrases found most frequently in messages heading in the opposite direction were “have you been”, “you gave”, “we are in”, “title” and “need in.” The value of identifying such words and phrases is that they can be considered reliable indicators of message types, and that kind of insight could be used to develop artificial intelligence-based messaging systems that automatically prioritize emails (say fast-tracking only emails from other higher-ups into the CEO’s inbox).

“We have organizational charts, but they don’t tell the whole story,”and the research could help map “informal power and reporting structures,” said Gilbert, in a statement. “A classic example is the CEO’s administrative assistant: That person may not occupy a high box on the org chart, but he or she still has a large amount of influence.”

Meh. So what? And that last example was pretty interesting, considering neither Jeff Skilling nor Ken Lay wrote their own emails.

I hate to say it – because nobody loves to read about Enron more than me – but the Enron emails are about as exciting as watching grass grow. Their content was nearly universally about work. Whatever organizational clues can be gleaned from them could probably be gleaned in some simpler way.

I think researchers keep toying with the emails because it is fun to say “Enron emails.” That’s about the only reason I can think of to keep wading through them, looking for new insights.

Some Enron Building Photos

Gary Mulgrew Seeks Missing Daughter

Gary Mulgrew recently discussed his book. One of the questions about his daughter will cut your heart out:

I hope my book will prompt someone who has seen my daughter will help me find her. The book’s a record for Cara to show I love her and I’m trying hard to find her. I last saw her when she was five. She’s ten now – her last birthday was a bad day for me. It reminded me so much time has passed. All I can do is hope she’s happy and that we’ll be reunited.

Having some experience with missing children, I am positive I can say – without Mr. Mulgrew’s permission – that longing for his child is probably the most agonizing experience of his life. I hope that his book is successful and brings his Cara home to him.

The interview is pithy and worth the three minutes it would take to read. Please take a look and buy his book, Gang of One.