A post by Jonah Goldberg at the Corner at NRO compares Fannie Mae to Enron… sort of favorably (for once!)
With the exception of Byron York, I don’t know anyone who’s ever really touched on this, but it could use more volume anyway. I am still at a loss as to why Bush should have been criticized much at all for Enron’s collapse, and yet that media firestorm consumed months of chatter in Washington. Meanwhile Fannie Mae really does have deep and abiding ties to Democrats, particularly the Clintonites (though there are Republicans in the mix as well). And Fannie Mae is just a much, much bigger deal than Enron ever was. But somehow nothing like the outrage over influence peddling has been in evidence.
I’m not arguing primarily that all of this should be used to flay Democrats, though McCain’s team would be idiotic not to seize this issue. But it does show how scandals in Washington have so much less to do with the substance and so much more to do with collecting scalps, usually Republican ones.
It’s fun to think.
It’s much worse than that, Mr. Goldberg. Enron even today is considered a “Republican problem” and a quick Google search will show you at least twenty thousand news stories today pointing out that Phil ‘Nation of Whiners’ Gramm had some tenuous link to Enron. In the first place, Enron never was a bad company. There was no fraud or conspiracy at Enron. I resent the name being used as shorthand to indicate something awry (or criminal).
Secondly, to address the point: Phil Gramm’s wife was on the board of Enron. But so what? A full 80% of the population knows somebody who was involved, in some tangential way, with Enron. If you’ve ever handled a penny, you’ve been involved with Enron. It was a big, powerful company, and it was connected. Just like every other big company – and just like many Democrat institutions (as Goldberg points out).
Besides all this, Gramm’s wife was never accused of anything untoward and her advertised connection to Enron is a red herring. “Enron” is a word that people use to stop other people from thinking – it’s like abracadbra! Bang! You lose all ability to use rational thought. So what, she was on the board of Enron. Whatever you think of his comments about “a nation of whiners”, you have to give him credit: at least he has good taste in women.
Enron Online: The Enron Blog 
Dear Ms. Ellison: Good heavens. This is remarkable:
“In the first place, Enron never was a bad company. There was no fraud or conspiracy at Enron.”
What would you call Andrew Fastow’s antics? Or the likes of Kristina Mordaunt who put up around five thousand dollars in a Fastow-controlled investment and got a million bucks back within three months? I’ll grant you freely that the liars in the press shrieked with joy and howled for blood. Remember Paul Krugman’s idiotic bawling that Enron would have a greater impact than 9/11? But the notion that there was no fraud or conspiracy at Enron is risible. Only at an Ivy League law school could such a notion by advanced and expect serious consideration.
Sincerely yours,
Gregory Koster
Mr. Koster,
Andrew Fastow and a small group of cohorts (ie. Mordaunt) skimmed from the Enron/LJM transactions. In those transactions ENRON WAS THE VICTIM. The money was taken from Enron.
There was a conspiracy at LJM. And fraud.
But at Enron? No, not at all.
I used to work down the street at a direct competitor of Enron, and I’ve worked with and known a lot of “Enron Guys” through the years, and I would disagree with the assertion that there was no fraud at Enron. The reason the company collapsed was because it became apparent to the stock market that it was playing games with mark to market accounting: realized cash flows were nowhere near what stated revenues were, yet the company as burning through cash (ie paying out huge salaries and bonuses) much more quickly than operations could replace it and was borrowing heavily to make up the difference and the company was as aggressive and arrogant as it was because it needed to intimidate the credit markets into giving more money without asking questions. There actually was A LOT of fraud at Enron – mostly accounting fraud, but also a lot of misrepresentations made to the equity markets – and Fastow’s little SPE schemes were basically the loose thread that unraveled the whole blanket.
THAT SAID, I agree wholeheartedly that it’s become dispositive shorthand for ignorant people who think that all businessmen look like Snidley Whiplash twirling his mustache and are always trying to screw people over. Enron was still a very innovative and smart company – it just fell victim to some crooked executives. Most people have no idea Phil Gramm’s “Enron Loophole” actually is, they just think it must be a bad thing if Enron was involved. Similarly, Enron wasn’t evil just because Californians were stupid enough to elect bad legislators who had no idea how to construct a robust and fair wholesale electricity market, Enron was just taking advantage of the business environment that they were given.
I defend Enron a lot these days. It was a good company and I am actually at a competitive disadvantage in the Houston job market these days because it’s not on my resume as it is with a lot of my fellow job-seekers. I think saying, “there was no fraud at Enron” is taking it a little too far, but Enron definitely was not the evil capitalist ogre that simple-minded people very much want it to be.
Hi John,
Thanks for your comment. I will leave most of it alone because it speaks to your direct experience, but I have to comment on your mark to market accounting point. Enron was never accused of abusing MTM accounting. Nobody was ever charged with securities fraud (or any other kind) in relation to making false statements about the value of an asset that was marked to market.
I think its an easy allegation to make because a lot of people don’t get MTM. I don’t necessarily think you’re in that group. If you worked for a competitor (Dynegy, I’m guessing), then you understand how forward contracts and mark to marketing works.
I’m willing to stand by my statement that there was no fraud at Enron, but when I say it I’m thinking specifically of the C-Suite. Jeff Skilling and the memory of Dr. Lay have been brutalized in these past eight years. After years of research, I have yet to see a single instance of Skilling or Lay acting in a way that constituted fraud.
Dear Ms. Ellison: You’ve got a great talent at explanations. If you haven’t, hie off to Harvard Law, and give them the spiel you’ve given us. They’ll not only admit you, they’ll make you faculty, maybe even Dean. Anyone with the talent to slice the baloney so thinly needs a large stage with plenty of spotlights to perform on.
Where to begin? OK, ENRON. Could you show us a picture of ENRON? Give us a biography? How many kids does ENRON have? What schools did ENRON attend? Of course you can’t. “ENRON” does not exist. It has no corporeality. It is merely what the lawyers call a “legal fiction” (the rest of us, who have to live in reality, call it a ‘lie’) that is generally agreed to at large so things can be made to work. You wrote:
“In the first place, Enron was not a bad company.”
Then why did it fail? it isn’t enough to load it all on Fastow. Why? Because there were other executives in the company who should have known about Fastow’s antics. They did not, and down went ENRON. Remember the day Fastow was fired, and Jeff McMahon replaced him? McMahon asked for a debt maturities schedule. The treasurer of this Fortune 50 company couldn’t do it, and had to scramble amongst his staff for several hours before coming up with a figure, a figure that was several billion dollars low. This may not be criminal, but then you have a question to answer, viz: At what point does ineptitude, laziness, stupidity, incompetence, carelessness, and sloth cross the line to criminality? Remember the legal fiction of a corporation? The law also has a legal fiction that there are degrees of incompetence severe enough to be treated as criminality. This is why Ken Lay was convicted. I have sympathy for the man. From what I’ve learned about him, he did seem honest. I can’t see him as a crook in the Andy Fastow manner. But consider this: when Skilling jumped ship as president (disgracefully, in my view) Lay came back. For this, the Board of Directors gave him a ten million dollar bonus. Ten million is more than 90% of all top bosses will earn in a lifetime. What value did Lay contribute to Enron for his ten million? The story of the merger with Dynegy is laugh out loud funny, as scheme after scheme blows up in Lay’s face. If you don’t laugh at it, you’d be horrified at such ineptitude. I can’t make Lay out. He seems a sharp fellow, but he was remarkably incurious about what was going on (“Ken gravitates toward good news,” as one of his staff put it) and lazy about finding out and correcting matters. With Skilling, matters are even worse. he allowed a system to come into being that spit in the face of honest effort, viz. the Performance Review Committee (PRC). This PRC rewarded Fastow & Co hugely, while downgrading Jim Bouillion (I may be misspelling his name) who bought Enron’s insurance, and Stinson Gibner, who recognized the danger a sudden drop in Enron’s credit rating would be to the company—and got an “average” performance rating for his pains. How did Skilling defend and protect these two, who did their best for Enron?
Mark to market accounting works well in a deep, well-established market. Using it for Enron’s original natural gas business made sense. It made no sense at all for water businesses, for broadband (pre- 2001), or for power generation.
No fraud at Enron? You’ve sliced the baloney quite thin in re Fastow. How about the “Death Star” and “Richochet” and “Fat Boy” strategies for power trading in California? Are these fraudulent? if not, are they honorable practices that Enron could show the world with no worries? How about the Raptor and Chewco “hedges”? Note how Enron officers kept pressing Arthur Andersen to approve the accounting. Was this honorable? Were Rick Causey and Rick Buy crooks? if not, were they honorable? If so, were they competent.
Mr. Greene, like you, says “Enron was good company.” Preposterous. This “good company” collapsed, ruining many reputations, and doing great harm financially and otherwise to Enron employees. I think he (and you) may mean:
“Enron had many good employees, and for a long time, was a first rate company. But in the end, there was enough incompetence, crookedness, and moral cowardice to overwhelm the good parts of the company, and bring it down.”
I can’t prove Ken Lay or Jeff Skilling acted fraudulently. I can show they were remarkably out of touch, which did not stop them from claiming big money for performance they did not give. Crooked? Fraudulent? Perhaps not in the legal, or even the common use of the words. Did they act diligently and honorably? No they did not. And they claimed the rewards of a first class performance anyway.
Last question for you: Did Skilling and Lay’s actions make, say, Ray Bowen’s and Jeff McMahon’s lives easier? Or aren’t Bowen and McMahon worth defending.
Sincerely yours,
Gregory Koster
Where to begin? OK, ENRON. Could you show us a picture of ENRON? Give us a biography? How many kids does ENRON have? What schools did ENRON attend? Of course you can’t. “ENRON” does not exist. It has no corporeality. It is merely what the lawyers call a “legal fiction” (the rest of us, who have to live in reality, call it a ‘lie’ that is generally agreed to at large so things can be made to work. You wrote:
Yep, its a company. Agreed.
I said:
“In the first place, Enron was not a bad company.”
You asked:
Then why did it fail?
Enron failed due to a run on the bank.
it isn’t enough to load it all on Fastow. Why? Because there were other executives in the company who should have known about Fastow’s antics.
Should have known….maybe. But they didn’t. Fastow said at trial that he was scared of being caught, that he conspired with Kopper to cover up his crimes.
When Fastow took his co-conspirators to the Caymens, he took everyone who made money with him. But Skilling wasn’t there. Lay wasn’t.
They did not, and down went ENRON. Remember the day Fastow was fired, and Jeff McMahon replaced him? McMahon asked for a debt maturities schedule. The treasurer of this Fortune 50 company couldn’t do it, and had to scramble amongst his staff for several hours before coming up with a figure, a figure that was several billion dollars low. This may not be criminal, but then you have a question to answer, viz: At what point does ineptitude, laziness, stupidity, incompetence, carelessness, and sloth cross the line to criminality?
Good question, but I doubt it will ever be answered. And I think that any judgement we have on the case is in retrospect.
Remember the legal fiction of a corporation? The law also has a legal fiction that there are degrees of incompetence severe enough to be treated as criminality. This is why Ken Lay was convicted.
No. He was convicted on conspiracy and a few banking charges from Regulation U.
I think you’re falling for the myth here. He was a Ph. D in economics. He was not stupid or incompetent. He was a good man, and a good executive.
I have sympathy for the man. From what I’ve learned about him, he did seem honest. I can’t see him as a crook in the Andy Fastow manner. But consider this: when Skilling jumped ship as president (disgracefully, in my view) Lay came back. For this, the Board of Directors gave him a ten million dollar bonus. Ten million is more than 90% of all top bosses will earn in a lifetime. What value did Lay contribute to Enron for his ten million?
A few things here.
First, Skilling did not ‘jump ship.’ He had been talking to Ken Lay, his brother, and others about leaving Enron for YEARS.
Secondly, what business is it of yours what Lay did to earn the money? It’s a serious question. His contract allowed for that, and he was entitled. Are you in a better position to value that than the Board of Directors?
The story of the merger with Dynegy is laugh out loud funny, as scheme after scheme blows up in Lay’s face. If you don’t laugh at it, you’d be horrified at such ineptitude. I can’t make Lay out. He seems a sharp fellow, but he was remarkably incurious about what was going on (”Ken gravitates toward good news,” as one of his staff put it) and lazy about finding out and correcting matters.
A lot of the top execs at the company were burning out. In the year preceding the collapse many of the old guard were leaving. I think Ken Lay was tired. That being said, I don’t think he was incompetent. Through the summer of 2001, the stock was attacked repeatedly – plus 9/11 happened, plus Skilling left … yeah, I think he was tired.
With Skilling, matters are even worse. he allowed a system to come into being that spit in the face of honest effort, viz. the Performance Review Committee (PRC). This PRC rewarded Fastow & Co hugely, while downgrading Jim Bouillion (I may be misspelling his name) who bought Enron’s insurance, and Stinson Gibner, who recognized the danger a sudden drop in Enron’s credit rating would be to the company—and got an “average” performance rating for his pains.
You got that story from Conspiracy of Fools. I hate to break this to you, but PRC isn’t illegal or even wrong. Do you ever have annual reviews at your job? I am sorry that some people were screwed over. One of the ENE people I speak with told me a story of being at the PRC and for no reason at all, Fastow attacked his guys. This is crappy, but it’s not illegal.
How did Skilling defend and protect these two, who did their best for Enron?
It’s not Skilling’s job to put out every little grease-fire. He was the Chief Executive, he had bigger fish to fry.
Mark to market accounting works well in a deep, well-established market. Using it for Enron’s original natural gas business made sense. It made no sense at all for water businesses, for broadband (pre- 2001), or for power generation.
MTM was not used in any of the international assets – ie, water or power generation.
No fraud at Enron? You’ve sliced the baloney quite thin in re Fastow. How about the “Death Star” and “Richochet” and “Fat Boy” strategies for power trading in California? Are these fraudulent? if not, are they honorable practices that Enron could show the world with no worries?
I do not believe they are fraudulent. That was the point of them – the traders were taking advantage of the holes the CPU created.
How about the Raptor and Chewco “hedges”? Note how Enron officers kept pressing Arthur Andersen to approve the accounting.
Those were two of Fastow’s projects – projects for which he is currently in prison.
Was this honorable?
Not my problem. It’s either illegal or not. The hedges were fine – but Fastow’s skimming was, obviously, not.
Were Rick Causey and Rick Buy crooks?
Absolutely not.
if not, were they honorable? If so, were they competent.
They were extremely competent, good men. Rick Causey is a sad case – if you’ve read his sentencing brief his attorney basically says – straight up – that he’s pleading guilty EVEN THOUGH HE ACTED IN ACCORDANCE WITH GAAP. This is an odd thing to say at a sentencing. And Rick Buy was never accused of anything.
Mr. Greene, like you, says “Enron was good company.” Preposterous. This “good company” collapsed, ruining many reputations, and doing great harm financially and otherwise to Enron employees. I think he (and you) may mean:
“Enron had many good employees, and for a long time, was a first rate company. But in the end, there was enough incompetence, crookedness, and moral cowardice to overwhelm the good parts of the company, and bring it down.”
No. I mean: Enron was a good company. It was innovative. It was strong. There was no fraud or conspiracy at Enron.
I can’t prove Ken Lay or Jeff Skilling acted fraudulently.
Yet you believe they did. Why?
I can show they were remarkably out of touch, which did not stop them from claiming big money for performance they did not give. Crooked? Fraudulent? Perhaps not in the legal, or even the common use of the words. Did they act diligently and honorably? No they did not. And they claimed the rewards of a first class performance anyway.
Well, not so fast. Skilling didn’t. At one point in his career he walked away from $50 million. Then when he left Enron, he was owed a severance and the company offered to repay a $2 million loan. Skilling opted out of the severance, and repaid the loan himself. If he’s a crook, he’s absolutely the most polite crook I’ve ever heard of. And I’d welcome him at my dinner table any day. I’d let him watch my children. I’d trust him, today, with my life savings.
Last question for you: Did Skilling and Lay’s actions make, say, Ray Bowen’s and Jeff McMahon’s lives easier? Or aren’t Bowen and McMahon worth defending.
Absolutely they are. I have been passionately pro-McMahon on this blog, for instance. But I reject the premise of the question. Skilling had no obligation to “make” anything easy for anyone. He was the CEO. His job was to run the company.
Dear Ms. Ellison: Thank you for your long response. let me tackle the points:
1. You write:
“Enron failed due to a run on the bank. ”
Let me answer this in the Cara Ellison style: Enron was not a bank, therefore there could have been no run on it. See how much fun it is to be literal?
Trying to address the substance of your statement: Enron did have a crisis of confidence that did it in in September-December 2001. But what caused the crisis of confidence? Enron’s earnings were impenetrable. It couldn’t come up with basic financial statements: at an analyst’s call, one short seller asked Skilling for hard figures on what Enron’s cash position was. Skilling didn’t have them and stalled, saying Enron needed to net out all its transactions, implying that the figures would be out shortly. The short seller snorted at this stalling. Skilling called him an asshole. That surely did not help Enron, nor Skilling. Further, why didn’t Skilling have the figures? He may have decided it wasn’t in Enron’s best interest to release them, but he didn’t have them. Again, this was a Fortune 50 company, and statements of cash flows are basic corporate finance. Yet the lack of such statements didn’t seem to bother Skilling. I think this is a serious fault in Skilling’s stewardship of Enron. He wasn’t alone in this carelessness, but that doesn’t excuse him. It just makes it harder to assert that Enron was a good company. Good companies do not have this climate of inertia and indifference.
2. You write:
“But they didn’t. Fastow said at trial that he was scared of being caught, that he conspired with Kopper to cover up his crimes.
When Fastow took his co-conspirators to the Caymens, he took everyone who made money with him. But Skilling wasn’t there. Lay wasn’t.”
Skilling knew Fastow’s faults; he had seen them up close when he assigned retail electricity selling to Fastow, and Fastow made a hash of it. He also knew that Fastow, in creating the LJM and other partnerships, had a strong possibility of a conflict of interest. The Board knew it and acknowledged this. For the life of me, I can’t understand why Skilling didn’t tell Fastow that, as a condition of doing business with Enron, LJM would have to file a copy of its financial results with Enron. A truthful statement would have revealed Fastow’s crimes immediately. It’s likely Fastow would have falsified Enron’s copy. But the strain of having to keep two sets of books would have greatly increased the chances of exposure as any embezzler can tell you. I still can’t figure out why Fastow’s role, with its conflict spelled out, never raised more eyebrows, among the directors. Certainly Jeff McMahon was concerned about the appearances of conflict. Why not take steps to monitor the conflicts as I’ve mentioned, the more so because Skilling knows of Fastow’s sloppiness in running businesses?
3. You write:
“And I think that any judgement we have on the case is in retrospect. ”
Sure, that’s the definition of history. There is a danger of hindsight turning the historian into a hanging judge. But conversely, the principal reason high executives draw big compensation is because they are supposed to have the skills and talent to see AT THE TIME, opporutnites and perils, which will become evident to the rest of us later on. Such talents aren’t infallible. But a review of Enron’s top management’s performance will turn the disinterested observer into a hanging judge. Lay, Skilling, all of those who weren’t cooperating with the government, had only one defense: I didn’t know anything, and they conspired to keep stuff from me. That’s not a sign of a good management.
4. You write:
“No. He was convicted on conspiracy and a few banking charges from Regulation U.”
Read what I wrote:
“The law also has a legal fiction that there are degrees of incompetence severe enough to be treated as criminality. This is why Ken Lay was convicted.”
He was convicted on the charges because his “I knew nothing” defense wasn’t credible. I don’t know if he was lying or not. Ken Lay’s career is hard to read. He doesn’t seem to be a crook, but his lack of energy and diligence was a puzzle. You defend Lay by saying he was tired, and that many of the management team were burning out. The only one I can see with a burnout claim was Skilling. Who else in management was burning out? Whalley? Causey? Buy? McMahon? Give us some names of burnouts.
Even if the burnout notion is true, it only makes Lay a tragic figure. The merger agreement that misfired because the Enron board “approved the wrong goddam deal” is a great example. How could such a mistake come from a good company? In the old Mets phrase, Can’t anybody here play this game? You’ve said that a top boss’s job isn’t to worry about how the small fry, e.g. a Stinson Gibner or a Kevin Kindall are treated. I don’t agree, but all right, grant it for a minute. Whose job is it to make sure that the terms the Enron board approved for the Dynegy merger are the ones that are on the table if not Lay’s? But he couldn’t do that job either.
5. You write:
“First, Skilling did not ‘jump ship.’ He had been talking to Ken Lay, his brother, and others about leaving Enron for YEARS. ”
He had talking about leaving. But when the succession came up in 2000, he pressed hard to become the top boss, strongly implying that if he wasn’t chose as #1, he would leave. Lay wanted Skilling to stay, and persuaded the directors to install Skilling. Six months later, Skilling quit, saying it was for “personal” reasons, and promptly sabotaging that story by telling the WALL STREET JOURNAL that he wouldn’t have left if the stock price had done better. (He didn’t even tell Enron what he was going to tell the JOURNAL.) This qualifies as “jumping ship” in my book, and not surprisingly when he came back to Enron for a visit, his colleagues treated him coldly, awarding him the notorious business decoration, the Order of the Rat. When he offered to come back in the worst of Enron’s troubles, Lay and later Whalley thought it would be a good idea, but were blocked by the rest of management, which didn’t want Skilling back. They too, thought he had jumped ship.
6. You write:
“Secondly, what business is it of yours what Lay did to earn the money? It’s a serious question. His contract allowed for that, and he was entitled. Are you in a better position to value that than the Board of Directors?”
It’s my business because I’m trying to demolish your notion that Enron is a “good company.” In a good company, employees give value for money. What value did Lay give for his ten million? As for being in a better position than the Directors, I am. Remember, the Directors exploded in wrath when they learned that Fastow had made $60 million out of the LJM partnerships. Yet Lay and the Directors could easily have learned what Fastow had made (see my point #2.) If they lacked the wit to monitor what they themselves had declared was a conflict, why should we credit their judgment of what Lay was worth?
Again: what did Lay do to earn his ten million? He couldn’t get a merger with Dynegy. The internal controls on Enron’s cash position were poor enough to allow the large cash injection Dynegy had made to be spent covering Enron’s trading position without senior management’s knowing about it until after it had happened. You could argue that internal controls are beneath Lay’s notice, but doing so demolishes your contention that Enron was a good company. What kind of good company has trouble rolling over its 30 day commercial paper, but does nothing about it until finally only overnight paper can be sold, and then has to draw down its revolving lines of credit, much against its bankers advice? This drawing hurt Enron badly in the public eye, and helped bring on what you call the run on the bank and I say was a crisis of confidence.
7. You mention that Lay was tired by 2001. I think therre’s much to that. Certainly he had wanted to leave Enron, but had to stay when Skillilng jumped ship. But this merely makes him a tragic figure, his powers failing even as conditions worsened. This is another reason to be dubious about Skilling. You say Skiling is polite. Polite people do not call even short sellers assholes on a public call. Nor do they leave top jobs after only six months, sabotage the stated reason for leaving adding to the embarrassment, while leaving chaos behind.
8. You write:
You got that story [on rating employee perfromance–GK] from Conspiracy of Fools. I hate to
break this to you, but PRC isn’t illegal or even wrong. ”
You are right, I did learn that from CONSPIRACY, but does the source of the information matter? You are right in that what was done in the PRC wasn’t illegal. You are dead wrong when you write that it wasn’t wrong. Deciding how employee performance is to be rated, and how they are to be paid, is a huge responsibility, one that is at the top boss’s task of “running the company.” In the armed services, using performance evaluations to settle scores is a big no-no. So too here. By letting Fastow stick it to those who opposed him, Lay and Skilling bought themeselves a peck of trouble. It was why Kevin Kindall left Enron, much against Vince Kaminski’s wishes. The unfairness also contributed to Stimson Gibner’s leaving. Call them small fry, but these small fry could have saved Enron, had Lay and Skilling listened to them and acted on their warnings. To say they were beneath notice ignores another task top bosses have: keeping in touch with the lower levels well enough so they can receive early warnings (Kindall) of great perils, without being bogged down. I ahave no doubt that Skilling, in prison, now wishes he had talked to these two.
“Of all sad words of tongue or pen
The saddest are these
‘It might have been.’
9. I’ll accept your word that mark to market wasn’t used for international projects. What about broadband? It was used there, wasn’t it, contributing paper earnings that looked great, but choked Enron when things went sour?
10. You write:
“I do not believe they are fraudulent. That was the point of them [the power trading strategies in California—GK]- the traders were taking advantage of the holes the CPU created.”
If the strategies weren’t fraudulent, why did Enron’s own lawyers shut them down—fast—when they found out about them? Could it be that even if legal, they were smelly enough to ruin Enron’s trading reputation? Even if not fraudlent, they did do Enron tremendous damage whe they were exposed. They showed a company that was not acting honorably.
11. You write that Raptor and Chewco were Fastow projects for which he is now in jail. Where was Rick Causey on the accounting for this? CONSPIRACY has a fine vignette of Jordan Mintz bringing Causey and Rick Buy information showing that there were accounting problems in Fastow’s schemes (I don’t remember if the problems were specificially with Raptor or Chewco.) Causey’s reaction is on par with Enron’s executives in 2001: Do we have to bring this up? I don’t want to know. This was deficient, deficient enough to persaude Causey to turn state’s evidence, rather than to defy prosecutors. His reputation will not recover from his limp performance at Enron. If I remember correctly, CONSPIRACY has a vignette of Mintz overhearing Causey muttering to himself, “I could have stopped the Raptors. No I couldn’t have. Yes I could.” The best you can say of him is that he is weak, not crooked. Not a comfortable epitaph.
12. You write:
“Not my problem. It’s either illegal or not. The hedges were fine – but Fastow’s skimming was, obviously, not.”
Show me Vince Kaminski saying that the hedges are all right, both in a legal and a financial sense, and I’ll believe it. Not before.
13. You write:
“Rick Causey is a sad case – if you’ve read his sentencing brief his attorney basically says – straight up – that he’s pleading guilty EVEN THOUGH HE ACTED IN ACCORDANCE WITH GAAP. This is an odd thing to say at a sentencing. ”
That is an odd thing to say at sentencing. The natural response is, why didn’t he fight the charges? Because his lawyer told him that the risk of being convicted was a near certainty, take the deal? It would be different if all that was happening was a fine. Most people can understand paying a fine to settle a matter that promises to drag on. But going to jail: Nope. No one can see that as anything but taking one lump from the prosecutor’s baseball bat to avoid five or six lumps.
14. You write:
” can’t prove Ken Lay or Jeff Skilling acted fraudulently.
Yet you believe they did. Why?”
I believe that Ken Lay is a sharp effective business leader, who nonetheless acted in a dumb, incompetent way at Enron. I can’t figure out why he did, and will likely never find out. Nor would I argue too vigorously agains those who hold he is a crook.
Skilling? I think he suffers from serious character flaws. His politeness is superficial, or perhaps is a late growth after all his troubles. I’ve mentioned the “asshole:” comment and leaving Enron after only six months in the top job, and sabotaging Enron’s efforts to keep up a story. But the most damaging thing is in the eiplogue to CONSPIRACY: he attended an Enron Christmas party, and started asking people if they thought he was guilty, specifically McMahon. This could only damage those he asked. If they answered, they might be putting themselves in jeopardy. So much for politeness. I think Skilling’s great abilities were undercut by his flaws. He helped bring himself down, and brought down a great company around him. He, the top boss, should have known about Fastow. it’s no good trying to claim Fastow is small fry, beneath Skilling’s notice. Fastow was bullying Enron staff to cover for his own crimes. Skilling should have stopped that. It’s likely that if Skilling had done so, he would have discovered Fastow’s crimes. He might have saved Enron if he is what you think he is. He too, has played the “If only” game a great deal since 2001.
He did none of these things, and sealed his fate.
If I may conclude on a personal note: I did you an injustice in my second posting. I thought your defense was mere lawyer’s cynicism, in the manner of Johnnie Cochran bawling to the cameras day after day that OJ was innocent. I now see this isn’t so. Skilling and Lay’s ghost are blessed to have you as a defender. The loyalty and stout spirit with which you’ve defended them are enormously impressive. But the bitter goes with the sweet. I don’t find your defense convincing, and I’m puzzled about why you are doing it. The historical verdict on Enron is in. It is partisan, and not completely just. But we will remain on opposite sides of the question, was Enron a good company? The best case you can put forward is to lead everything on Fastow. But that convicts Lay, Skilling, and a host of others at Enron of witlessness at best, moral cowardice at worst. Sherron Watkins, incidentally is no hero, just an ambitous woman who will title her memoirs, ON THE MAKE: THE RISE AND RISE AND RISE AND RISE OF THE BIGGEST CONSCIENCE IN TEXAS WHO SUFFERED LIKE HELL BEFORE GETTING HER JUST REWARD. Bah.
Thank you for your patience with this enormous comment
Sincerely yours,
Gregory Koster
But what caused the crisis of confidence?
Several things. A deliberate attack on the stock by short sellers, combined with several long, strange attacks in news papers was the begining. Then in October, Fastow was fired, and the SEC opened up an ‘informal inquiry.’ I think these things, even today, would be seen negatively by the marketplace.
Enron’s earnings were impenetrable.
Not true. I’ve written about them here and several other places. But they were actually some of the clearest I’ve ever read. It’s become legend now that nobody could understand them. But a quick glance at them will immediately clear up that lie.
It couldn’t come up with basic financial statements: at an analyst’s call, one short seller asked Skilling for hard figures on what Enron’s cash position was. Skilling didn’t have them and stalled, saying Enron needed to net out all its transactions, implying that the figures would be out shortly. The short seller snorted at this stalling. Skilling called him an asshole.
I wrote about that here.
But let us get some facts straight in case you don’t want to click over: Richard Grubman, the shortseller, had asked for the balance sheet three previous times in three previous calls. Skilling had told him over and over again, we don’t do things like that at Enron. At trial, it was explained in detail why not – numbers were still being collected and collated at that time. Yes, Skilling called him an asshole, but that doesn’t mean there was anything wrong with the balance sheets – it means that Richard Grubman was just being, well, an asshole.
That surely did not help Enron, nor Skilling. Further, why didn’t Skilling have the figures? He may have decided it wasn’t in Enron’s best interest to release them, but he didn’t have them.
Again, he was a responsible executive. He wasn’t going to give out unfinished (ie, FALSE) figures just to satisfy some short seller.
Again, this was a Fortune 50 company, and statements of cash flows are basic corporate finance. Yet the lack of such statements didn’t seem to bother Skilling.
Not true. He expressed remorse over the subject repeatedly. He apologized in front of Congress, for instance.
I think this is a serious fault in Skilling’s stewardship of Enron.
If you mean that he called the guy an asshole, I’ll concede that he shouldn’t have let the guy get to him. But if you mean the balance sheet, you’re wrong because Skilling didn’t institute that policy.
He wasn’t alone in this carelessness, but that doesn’t excuse him. It just makes it harder to assert that Enron was a good company. Good companies do not have this climate of inertia and indifference.
I don’t think anyone has ever accused Skilling of being indifferent.
Skilling knew Fastow’s faults; he had seen them up close when he assigned retail electricity selling to Fastow, and Fastow made a hash of it. He also knew that Fastow, in creating the LJM and other partnerships, had a strong possibility of a conflict of interest. The Board knew it and acknowledged this. For the life of me, I can’t understand why Skilling didn’t tell Fastow that, as a condition of doing business with Enron, LJM would have to file a copy of its financial results with Enron. A truthful statement would have revealed Fastow’s crimes immediately.
Jeff Skilling wouldn’t have insisted on that, because though there was a conflict of interest (and you’re right, everyone knew that), LJM was set up to be an independent company. There was no reason LJM would file anything with Enron, any more than Coke would file with GM.
It’s likely Fastow would have falsified Enron’s copy.
Then why bother?
But the strain of having to keep two sets of books would have greatly increased the chances of exposure as any embezzler can tell you. I still can’t figure out why Fastow’s role, with its conflict spelled out, never raised more eyebrows, among the directors.
I think that people at the time were willing to believe in his integrity. He had done some pretty interesting things and there was no reason to believe he couldn’t continue.
Certainly Jeff McMahon was concerned about the appearances of conflict.
I’m sure some people were concerned. Many people didn’t know Fastow was LJM. But I think when you’re an executive, like Fastow was, then you get the benefit of the doubt in a lot of areas.
Why not take steps to monitor the conflicts as I’ve mentioned, the more so because Skilling knows of Fastow’s sloppiness in running businesses?
I don’t know how you can say that Skilling knew of Fastow’s “sloppiness”. Just because he was unsuccessful at one thing doesn’t mean he’ll suck at everything.
Lay, Skilling, all of those who weren’t cooperating with the government, had only one defense: I didn’t know anything, and they conspired to keep stuff from me. That’s not a sign of a good management.
That isn’t true at all. Skilling and Lay never exerted an osterich defense. Skilling was GONE WHEN ENRON COLLAPSED. He wasn’t right there in the thick of it, and he truly didn’t know a lot of things but he didn’t use that as an excuse for some alleged criminality. He took pride in his involvement in the company. As Berkowitz kept saying in the trial, “He had his hand firmly on the wheel.” He was an engaged, active, involved executive.
That being said, if Fastow were hiding something from him, how would he know it? Fastow said at trial that he went to great lengths to cover up his crimes. Skilling couldn’t follow his team around 24/7 to make sure they weren’t being sneaky. He was (and is) a good man, a good executive, who was ensnared in something that he shouldn’t have been.
He was convicted on the charges because his “I knew nothing” defense wasn’t credible.
Again, I think we need to make the distinction between “I knew nothing” and “I knew nothing of Fastow’s crimes, and besides that there was simply nothing to know.”
I don’t know if he was lying or not. Ken Lay’s career is hard to read. He doesn’t seem to be a crook, but his lack of energy and diligence was a puzzle.
I’ll tell you a story about the time I met Ken Lay. One evening, I was out with a Chron reporter, and we were having drinks at a place called the Texas State Bar. I don’t think it exists anymore but at the time it was a bar in downtown Houston. My companion looked up and said, “Holy shit, that’s Scott McNulty.” I looked past Scott McNulty, and saw Ken Lay standing at the door of the room, holding the door open for a bunch of college kids. He had a smile on his face. The kids didn’t even say thank you. My companion got up to speak to Scott McNulty and I stayed where I was. A little while later, Scott and Dr. Lay came over and shook our hands and said hello again.
I will always remember that Dr. Lay held open the door for people who didn’t even thank him. It wasn’t like a huge big deal. I realize that mannerly men do it all the time. But he had no reason to do it, and it was just an act of benevolence that stuck in my mind. He was not somebody who disliked people.
We can debate all day long why Dr. Lay wasn’t this or that or whether he fit the mould of a good executive. But I know that he had a long, prosperous career and that he was a good guy – even when nobody was watching.
You defend Lay by saying he was tired, and that many of the management team were burning out. The only one I can see with a burnout claim was Skilling. Who else in management was burning out? Whalley? Causey? Buy? McMahon? Give us some names of burnouts.
Lou Pai. Ken Rice was barely showing up. Cliff Baxter.
Even if the burnout notion is true, it only makes Lay a tragic figure. The merger agreement that misfired because the Enron board “approved the wrong goddam deal” is a great example. How could such a mistake come from a good company? In the old Mets phrase, Can’t anybody here play this game?
That’s a cute phrase, I’ve never heard it before.
Companies and people make mistakes all the time. I don’t really see anything “good” or “bad” in that. If I use my imagination (a dangerous thing when talking about history), I think I would say they were probably burned out and a bit panicked too, and maybe their attention wasn’t as total as it should have been.
You’ve said that a top boss’s job isn’t to worry about how the small fry, e.g. a Stinson Gibner or a Kevin Kindall are treated. I don’t agree, but all right, grant it for a minute. Whose job is it to make sure that the terms the Enron board approved for the Dynegy merger are the ones that are on the table if not Lay’s? But he couldn’t do that job either.
Wait a sec. You’re mixing apples and eggs here. It’s not Skilling’s job to make sure every employee is happy and well cared for (that’s why you have a Human Resources department.) Though I will say there are ample examples of Skilling doing just that. At his sentencing, it was revealed that he’d personally paid for the operations of one employee whose insurance didn’t cover her particular needs. But to address the bigger point, it was definitely in Lay’s jurisdiction to make sure all the points were laid out for the board, but I don’t really see any nefarious activity here. It was just an oversight.
He had talking about leaving.
He had even written a resignation letter.
But when the succession came up in 2000, he pressed hard to become the top boss, strongly implying that if he wasn’t chose as #1, he would leave.
Cite source please. That’s one of the big myths about Jeff Skilling. Sharron Watkins called it his “Dream Job.” But the truth is, Jeff Skilling never said it was his dream job.
If he got the job at the threat of walking again, I guess the Board and Dr. Lay believed he was more valuable as CEO than not in the company at all.
Lay wanted Skilling to stay, and persuaded the directors to install Skilling. Six months later, Skilling quit, saying it was for “personal” reasons, and promptly sabotaging that story by telling the WALL STREET JOURNAL that he wouldn’t have left if the stock price had done better. (He didn’t even tell Enron what he was going to tell the JOURNAL.)
Skilling told the WSJ that he left for personal reasons and he added that the falling stock price was evidence of his burn out.
This qualifies as “jumping ship” in my book, and not surprisingly when he came back to Enron for a visit, his colleagues treated him coldly, awarding him the notorious business decoration, the Order of the Rat.
Again, this is legend but its misleading. Not everybody shunned him. There were a few who looked in askance at him, but he wasn’t some parriah.
When he offered to come back in the worst of Enron’s troubles, Lay and later Whalley thought it would be a good idea, but were blocked by the rest of management, which didn’t want Skilling back. They too, thought he had jumped ship.
They thought it would confuse Wall Street. And yes, several people did want him back, but it was decided that he wouldn’t come back.
It’s my business because I’m trying to demolish your notion that Enron is a “good company.” In a good company, employees give value for money. What value did Lay give for his ten million?
Executives are paid what they are paid because they provide leadership and vision in addition to other skills. His ten million is no more or less appropriate than any other CEO’s compensation. I find this the weakest argument that Enron was corrupt.
As for being in a better position than the Directors, I am. Remember, the Directors exploded in wrath when they learned that Fastow had made $60 million out of the LJM partnerships. Yet Lay and the Directors could easily have learned what Fastow had made (see my point #2.) If they lacked the wit to monitor what they themselves had declared was a conflict, why should we credit their judgment of what Lay was worth?
Dr. Lay – or you, or me, or anyone else – is worth exactly what somebody will pay for us. So he was worth every cent he made.
Again: what did Lay do to earn his ten million? He couldn’t get a merger with Dynegy. The internal controls on Enron’s cash position were poor enough to allow the large cash injection Dynegy had made to be spent covering Enron’s trading position without senior management’s knowing about it until after it had happened. You could argue that internal controls are beneath Lay’s notice, but doing so demolishes your contention that Enron was a good company.
I don’t think so. I think Enron was a great company, and Dr. Lay’s compensation had nothing to do with the Dynegy merger.
What kind of good company has trouble rolling over its 30 day commercial paper, but does nothing about it until finally only overnight paper can be sold, and then has to draw down its revolving lines of credit, much against its bankers advice?
A company in dire financial straits, a company doing what it must do to survive.
This drawing hurt Enron badly in the public eye, and helped bring on what you call the run on the bank and I say was a crisis of confidence.
The internal structure of the company had weakened by that point. Enron was very weak, bleeding money, by then. So it took nothing for it to finally topple.
You mention that Lay was tired by 2001. I think therre’s much to that. Certainly he had wanted to leave Enron, but had to stay when Skillilng jumped ship. But this merely makes him a tragic figure, his powers failing even as conditions worsened. This is another reason to be dubious about Skilling. You say Skiling is polite. Polite people do not call even short sellers assholes on a public call.
Well, he’s also: brilliant, sweet, funny, gorgeous, talented, emotional. He has integrity, lives by his values, and is presently in prison for crimes he didn’t commit.
But yes, he’s polite. And polite people do have their limits when they snap. God knows, I do it and I consider myself as polite as they come. I did it a few weeks ago and my boyfriend is still pissed at me. So it can happen.
Nor do they leave top jobs after only six months,
Why not? He wanted to leave, it’s a free country.
sabotage the stated reason for leaving adding to the embarrassment, while leaving chaos behind.
I don’t think he did that. He expressed over and over again that the reason he was leaving was for personal reasons.
You are right, I did learn that from CONSPIRACY, but does the source of the information matter?
Maybe. I say that only because a lot of what’s in those books (Conspiracy and, don’t even get me started on the Smartest Guys In The Room) is false or misleading.
You are right in that what was done in the PRC wasn’t illegal. You are dead wrong when you write that it wasn’t wrong. Deciding how employee performance is to be rated, and how they are to be paid, is a huge responsibility, one that is at the top boss’s task of “running the company.”
Well, usually there is a policy in place – it’s not usually the CEO’s job to get mixed up in human resources.
In the armed services, using performance evaluations to settle scores is a big no-no.
Hell, doing that ANYWHERE is a big no-no.
So too here. By letting Fastow stick it to those who opposed him, Lay and Skilling bought themeselves a peck of trouble.
But it wasn’t just Fastow, and there were some really good reasons to do evaluations this way.
It was why Kevin Kindall left Enron, much against Vince Kaminski’s wishes. The unfairness also contributed to Stimson Gibner’s leaving. Call them small fry, but these small fry could have saved Enron, had Lay and Skilling listened to them and acted on their warnings.
If if if. There are a lot of Ifs in this case, and they’re all tragic.
To say they were beneath notice ignores another task top bosses have: keeping in touch with the lower levels well enough so they can receive early warnings (Kindall) of great perils, without being bogged down.
And they did. Dr. Lay met with Sharron Watkins. And Jeff Skilling was known to walk the halls every afternoon to keep in touch with the guys in cubes.
I ahave no doubt that Skilling, in prison, now wishes he had talked to these two.
Really? Did he tell you that?
I’ll accept your word that mark to market wasn’t used for international projects. What about broadband? It was used there, wasn’t it, contributing paper earnings that looked great, but choked Enron when things went sour?
That’s not really what Mark to Marketing is. And I don’t think there was even a place for Mark to Market in Broadband – they weren’t selling forward contracts. But I think what you’re getting at is the dark fiber sales?
If the strategies weren’t fraudulent, why did Enron’s own lawyers shut them down—fast—when they found out about them?
Because they very well might have been a bad idea. I’m not arguing that. But at the time, the rules were written a certain way and the traders were enjoying toying with them.
Could it be that even if legal, they were smelly enough to ruin Enron’s trading reputation? Even if not fraudlent, they did do Enron tremendous damage whe they were exposed.
A lot of it is myth now, the evil traders. But I agree, the myths have caused Enron a lot of harm.
They showed a company that was not acting honorably.
They showed some employees who were not acting honorably.
You write that Raptor and Chewco were Fastow projects for which he is now in jail. Where was Rick Causey on the accounting for this? CONSPIRACY has a fine vignette of Jordan Mintz bringing Causey and Rick Buy information showing that there were accounting problems in Fastow’s schemes (I don’t remember if the problems were specificially with Raptor or Chewco.) Causey’s reaction is on par with Enron’s executives in 2001: Do we have to bring this up? I don’t want to know.
Again, I feel really odd about replyig to a story in a book. I don’t know what Causey said.
This was deficient, deficient enough to persaude Causey to turn state’s evidence, rather than to defy prosecutors.
Newp. Not true. He pled guilty to conspiracy in one tiny transaction nobody cared about – GREYHAWK – which was legally sound. And I think you’ll find that almost all the people who pled guilty did so out of stark raving fear. They were terrified of long prison sentences. And many of them were threatened. The Enron Task Force made people’s lives hell for YEARS and years. I’ve talked to people who were, even today, terrified of them. They still have their little “unindicted co-conspirator’s list”, which they lord over people like a weapon, threatening to indict if they talk to Jeff Skilling or Ken Lay’s defense.
His reputation will not recover from his limp performance at Enron. If I remember correctly, CONSPIRACY has a vignette of Mintz overhearing Causey muttering to himself, “I could have stopped the Raptors. No I couldn’t have. Yes I could.”
I actually smiled when I read that. Cute.
The best you can say of him is that he is weak, not crooked. Not a comfortable epitaph.
I think he’s an honest, upstanding guy – even he said so when he pleaded guilty – but he was terrified, like a lot of other people.
Show me Vince Kaminski saying that the hedges are all right, both in a legal and a financial sense, and I’ll believe it. Not before.
Why? Why only Vince Kaminski? What’s so magical about him and his opinion?
That is an odd thing to say at sentencing. The natural response is, why didn’t he fight the charges?
Because his lawyer told him that the risk of being convicted was a near certainty, take the deal?
Probably. But what kind of justice is that? That you can take your little 5 year sentence if you say you’ve been a bad boy, but if you actually exert your constitutional rights, you might get 30 years or more? That’s not justice, that’s extortion.
It would be different if all that was happening was a fine. Most people can understand paying a fine to settle a matter that promises to drag on. But going to jail: Nope. No one can see that as anything but taking one lump from the prosecutor’s baseball bat to avoid five or six lumps.
Exactly. But that’s the thing – why is that okay?
I believe that Ken Lay is a sharp effective business leader, who nonetheless acted in a dumb, incompetent way at Enron. I can’t figure out why he did, and will likely never find out.
I guess that’s better than thinking he’s a criminal.
Nor would I argue too vigorously agains those who hold he is a crook.
Hm. I just don’t see it. I don’t see it in his personality, or his life, or his motivation. It’s not there. Why would he spend his whole career building a company, only to destroy it?
Skilling? I think he suffers from serious character flaws. His politeness is superficial, or perhaps is a late growth after all his troubles. I’ve mentioned the “asshole:” comment and leaving Enron after only six months in the top job, and sabotaging Enron’s efforts to keep up a story. But the most damaging thing is in the eiplogue to CONSPIRACY: he attended an Enron Christmas party, and started asking people if they thought he was guilty, specifically McMahon. This could only damage those he asked. If they answered, they might be putting themselves in jeopardy. So much for politeness.
I think you’ve wandered into the truth somewhere in there. You say he could have put others at risk, which I think is why he had so few defenders at trial. But corelating his politeness to that doesn’t seem right. These were his friends, and I think he felt comfortable with them (and scared in general) that he could ask. Maybe he didn’t yet understand what was happening. There have been times in my own life when I acted in a clumsy way, saying stupid things, desperate for approval or assurance without realizing I was hurting the other person. I think sometimes when you are in a crisis situation, you get tunnel vision. You can’t see what you’re doing to others because your problems seem so big they block out everything else. Jeff Skilling is one of the strongest men I know of, but I think he has a sensitive side too, and if I had to guess, I’d say that he was probably silently freaking out. I don’t think that negates his manners, but I think in that situation, he couldn’t see that other people just could not help him the way he really wanted to be helped or comforted.
I think Skilling’s great abilities were undercut by his flaws. He helped bring himself down, and brought down a great company around him. He, the top boss, should have known about Fastow. it’s no good trying to claim Fastow is small fry, beneath Skilling’s notice.
No, I don’t think he was beneath Skilling’s notice. But I think that Skilling could not have known what he was doing since, by his own admission, he was trying to keep Skilling from knowing.
Fastow was bullying Enron staff to cover for his own crimes. Skilling should have stopped that. It’s likely that if Skilling had done so, he would have discovered Fastow’s crimes. He might have saved Enron if he is what you think he is. He too, has played the “If only” game a great deal since 2001.
We all have, I think.
He did none of these things, and sealed his fate.
Oh I think it’s much more complex than that. One of the theories that seems to have some stickiness for me is that he was doomed from the begining. After 9/11, we couldn’t catch Bin Laden and Skilling and Lay were easy to catch. You didn’t even have to leave the US. The DOJ needed a win, a nice big juicy win, and so I think when they saw the opportunity to prosecute, they were going to not only prosecute but destroy. They were going to swoop in with their American flags on their lapels and save the poor innocent plebes from the likes of Skilling and Lay. But Skilling and Lay were strong – and they didn’t roll over. They didn’t just quietly take their 10 year sentences and shut up. They fought, and in doing so, they put a huge amount of trust into their fellow man. The twelve men and women on the jury had no fucking idea what they were listening to. They could not tell a forward contract from a forward flip. They were ill-equipped to handle the case, and by the prosecution’s own admission, the Task Force was ill-equipped to prosecute. Reading through the trial transcripts, I actually laughed out loud a few times because Berkowitz just didn’t know what he was talking about. I was blogging under a different name back then (Right Thinking Girl) and I remember watching the verdict on television, and all I could write on my post was “Oh my god. I can’t believe it.” I was just stunned, though in retrospect I shouldn’t have been.
I like to think that at any given moment, a person has the ability to do a whole world of things. But I think now that Skilling was set on a path that he couldn’t diverge from – he was almost fated to become this person that he is today. But the good news is that I think that he has a real shot of being exonerated, and returned to society. I think the story is not over yet.
If I may conclude on a personal note: I did you an injustice in my second posting. I thought your defense was mere lawyer’s cynicism, in the manner of Johnnie Cochran bawling to the cameras day after day that OJ was innocent. I now see this isn’t so. Skilling and Lay’s ghost are blessed to have you as a defender. The loyalty and stout spirit with which you’ve defended them are enormously impressive. But the bitter goes with the sweet. I don’t find your defense convincing, and I’m puzzled about why you are doing it.
Well, I’m doing it because I believe in their innocence. I am doing it because I’ve spent the last eight years of my life studying the company and I just can’t see any crime. I feel strongly enough about it that I get up every day and defend them. I realize its a tough road to hoe, but I do it anyway.
I think there is more happening here than just a tale of corporate crime. I think Skilling and Lay are symbols now, scapegoats, and it’s my dearest hope that I can restore some semblance of balance to the stories and lies and myths out there.
The historical verdict on Enron is in. It is partisan, and not completely just.
Then its not just at all. You can’t say I’m a fan of Andy Fastow or Ken Rice, for instance, but I do think they’ve been completely manipulated and they’ve sold their souls. I think it’s easy to say “so what” to that, but I don’t think justice is served when you grab a group of people and make them turn on each other. I just don’t see how that’s right. There is no such thing as partial justice. This whole situation is just awful.
But we will remain on opposite sides of the question, was Enron a good company? The best case you can put forward is to lead everything on Fastow. But that convicts Lay, Skilling, and a host of others at Enron of witlessness at best, moral cowardice at worst.
I don’t think so. And I don’t think that Fastow’s crimes are what brought down Enron.
Sherron Watkins, incidentally is no hero, just an ambitous woman who will title her memoirs, ON THE MAKE: THE RISE AND RISE AND RISE AND RISE OF THE BIGGEST CONSCIENCE IN TEXAS WHO SUFFERED LIKE HELL BEFORE GETTING HER JUST REWARD. Bah.
She’s a joke. She’s been awarded this hero status when in reality she’s an insider trader (by her own admission) and when she wrote that memo to Ken Lay she was basically saying, “I know you’re dirty, cut me in or I’ll go to the police.”
I admire her ability to create something from nothing, on so many levels.