An Interesting Email Exchange

I received an interesting email last night that I thought I would share (with the author’s personal information redacted) along with my reply.

Hi,

I was 15 when Enron collapsed. I paid virtually no attention to to it.
About 4 months ago I became nearly obsessed with the subject. I’ve
read The Smartest Guys in The Room twice, I’ve looked up everything I
can find on the internet, watched videos of Skilling and Lay, read
endless interviews, etc. I even attempted to write Mr. Skilling in
jail, although haven’t heard back (thinking about writing again,
actually).

The first time I read TSGITR, I was completely absorbed in the
intelligence of the major players. The second time, I realized how
badly they ran the company. Obviously you have more knowledge on any
of this than I do, and my question is simple: how can you think that
these guys weren’t crooks?

TSGITR lays out an almost irrefutable case against them, a company
that spent its future on the present and then lied about it. Grant it,
it took the acceptance of EVERYONE involved to make it
possible–lawyers, accountants, analysts, and banks were all willing
accomplices in this fraud, but the men at Enron still committed the
lies. The accounting didn’t break actual rules in their individuality,
but in their totality added up to a large, seemingly undeniable lie.

I’ve read a lot of your blog, but it seems to be just reminiscing on
how much you miss these guys now. I want to know what hard evidence
you have that Skilling/Lay were innocent? That Enron was indeed a
strong company as they both claim? It seems impossible given the lack
of cash flow and the mountain of debt accumulated. I’m almost hoping
you prove me wrong, because as I said, I sort of fell in love at first
with the idea of these ‘supermen’ changing the world.

If you don’t have the time/inclination to respond, totally understand.
Just wanted to learn from someone more knowledgeable than I.

My reply:

Hello,

Thank you for the email and for your interest. I will write more later when I have more time, but here are some quick thoughts:

First, remember that books like TSGITR are essentially spin documents. If you read some of the comments that the authors have made about their thought process, you know that those authors wrote their books to support the concept of criminal wrongdoing at Enron. These were not objective analyses of Enron by any definition of the term. Thus, you are seeing only one side of the story — these authors made no attempt to be balanced — they wanted to sell books, not perform an objective analysis. So my point is simply to be skeptical of that material. And look to this blog and other sources for additional material (like ungagged.net and the Houston’s Clear Thinkers blog).

Second, Enron was not afraid of taking business risks. And I agree they made some bad business decisions (along with lots of good ones). But making bad business decisions is not a criminal act. Indeed, taking business risks is the lifeblood of American free enterprise. So, even if you are convinced that Enron was “poorly run” (and there are lots of counter-arguments to that contention), it says absolutely nothing about criminal, or even civil, wrongdoing.

Third, glaring proof of the weakness of the Fed’s cases is simply that they failed miserably in most of the Enron prosecutions at trial. If you get a chance to read actual trial transcripts, you will be amazed at the glaring holes in the prosecutors’ cases. The defendants had little trouble refuting the actual charges against them.

Finally, you might want to read my blog posts about Rex Shelby. Rex is a University of Georgia graduate (who also has an MBA from UNC-Chapel Hill). Rex is an entrepreneur whose software company was acquired by Enron Broadband. Rex is so obviously innocent that even prosecution witnesses agree to his innocence. And yet, he had to fight the Feds for more than eight years, essentially depleting his life savings in doing so. Admittedly, Rex’s situation is a particularly glaring case of DOJ misconduct, but the Feds in the Enron Task Force who committed the abuse against him are largely the same people who participated in some of the other Enron prosecutions.

Here’s the key take-away: Always be skeptical when the state wields its powers against the individual. Remember that Enron the company was never indicted. Only private individuals were indicted. And we owe it to those individuals, in the best American tradition, to be skeptical of government accusations and abusive tactics.

Thanks again,

Cara