Yesterday I was having a conversation with an Enron executive who put some difficult questions to me, questions I found myself blanking on.
For instance, why was there no discussion or accusation of anything criminal until 2002 – several months after the collapse of the company?
Why does a declining stock price cause bankruptcy – doesn’t that just mean the company is worth less?
And what exactly was Andy Fastow supposed to have stolen?
That last one tripped me up, and I felt a little ashamed because I’d accepted that there were bad actors at Enron and that he was probably one of them. But now that I really think about it, he was accused of having “inflated Enron’s earnings and hid debt.” That never happened at Enron – I know that for a fact. But, for the sake of argument let’s say it’s totally true. How does that equal theft? If Andy Fastow hid debt, he didn’t personally benefit from that, and then the conversation starts to wander toward an Honest Services discussion, which puts him about on par with Jeff Skilling.
The three transactions that I’ve said Fastow “stole from” were Chewco, RADR and Southampton. And now that I think about it, I don’t think he stole money at all. Chewco was trouble because it was alleged to have been incorrectly accounted for years. Southampton was the deal that sent the NatWest Three to prison. And RADR was a wind farm deal in which both Lea and Andy Fastow supposedly got kickbacks. But that isn’t theft, and the more I think about it, the more I am furious that I myself fell for the line that Andy Fastow is a thief.
In The Smartest Guys In The Room Sherron Watkins pours on the snark when she says, “We all knew Andy didn’t have the strongest moral compass…”
Well if that’s true, why didn’t anyone rein him in? And furthermore, if he had a reputation as someone who was willing to bend the rules, did that make it easier to accuse him of all manner of things that he might not have actually done? He’s sort of the Boo Radley of Enron, isn’t he? The guy everyone *just knows* did something terrible because he was a hard-ass at the PRC and maybe he took the last donut one morning.
But what if we’re all wrong and he’s not that guy? What if he’s just a much a victim of an overzealous DOJ as Jeff Skilling?
I think I need to consider this seriously. I will be spending the next few weeks reviewing Andy Fastow’s transactions, and sharing any insights and questions I have.