ustxtxb_obs_2005_05_27_50_00022-00000_000.pdf

BOOKS & THE CULTURE Thrilling, Chilling, and All Too True BY JAMES E. McWILLIAMS Conspiracy of Fools By Kurt Eichenwald Broadway Books 768 pages, $26. H Eichenwald’s meticu alfway through Kurt lous reconstruction of Enron’s rise and fall, Bill Collins, a com pany executive, has an epiphany. Suddenly, seeing right through the sordid scrim of America’s corporate miracle, he gets it. It’s all bullshit. The profits aren’t real. The glowing analyst reports aren’t real. The Fortune Magazine encomiums aren’t real. Enron is a total fake. Collins is also rather eloquent about his realization. “I don’t care what lipstick and rouge you paint that bitch up with,” he wrote about Enron, ” [s] he’s still just dead meat lying on the sofa.” Poetic truth. Nevertheless, this gussied up bitch from Houston wouldn’t go down without a fight. And while the likes of CFO Andy Fastow might have appreciated a soft sofa to rest a weary head upon, he and several of his co-conspirators got a cold hard cot in the clinker. But really, we already knew all this, right? I mean, do we have to go through 700-plus pages of this again? I’d recommend it. Eichenwald, who covered the Enron scandal for The New York Times, might be telling an old story. But the story per se isn’t the point. Eichenwald’s brilliance is to understand that the conventional tale of America’s largest corporate scandala complex affair centered on shady hedge funds, off-thebooks debt, and scores of other mindbending accounting anticsobscured something more basic: human greed. Brilliantly and with astounding clarity, Eichenwald, based on over 1,000 hours of interviews with hundreds of Enron players, tells a story in which finan cial matters are more than cold numbers calculated by profit-driven, Darwinian-minded suit-and-tied hob-nobbers armed with nine irons. Instead, by developing men like Andy Fastow, Jeff Skilling, and Ken Lay into real people \(rather than iconic hand-cuffed perp-walkuniversal qualities that anyone could graspthings like egotism, vulnerability, and emotional emptiness. The effect is such that if you already read the business pages, you’ll now do so differently. And if you don’t read them, you’ll start. It is, in short, a thrilling, captivating, transformative book on an esoteric topic with all the potential to induce a coma. Eichenwald’s decision to tell the story in real time, with dialogue, elaborate descriptions of setting, and omniscient narration, helps. Although I’ve never read John Grisham or John le Cane, I imagine the blurbers are right when they sketch Conspiracy of Fools as “a business book for Grisham readers” and “a tangled tale worthy of John le Cane.” Eichenwald, albeit with choice sleights of hand, brings us into Ken Lay’s mind as he stretches against a tree before a morning jog, Jeff McMahon’s thoughts as he frantically circles highway 610 after yet again butting heads with the arrogant Fastow, and Jeff Skilling’s free fall into acute depression, which he treats by downing 15 glasses of wine, curling into the fetal position and moaning to his fiance, “Everything is gone!” “Everything” began as “Enteron” in 1986, led by a freshly divorced, rested and ready Ken Lay. The name combined “energy” with the company it merged with, InterNorth. After going public with the name, however, the company quickly learned that an enteron happens to be a digestive tube stretching from mouth to anus. Turns out we all have an enteron. Making matters more laughable, Enteron was a company that produced and transported natural gas. It was thus an inauspicious, if telling, start to a company that would become the darling of the business world. Nobody had bothered to check uh, like, the dictionary. In June of 1990, with his wife six hours into labor with their third child, Jeff Skilling left the room to call Ken Lay and accept his offer to direct Enron’s finance division. As a McKinsey and Company whiz-kid, the thirty-something Skilling knew the energy market intimately. At the same time, he felt trapped at McKinsey, bound by regulations he found oppressive. Enron’s free-wheeling ethos promised an opportunity to put his renegade ideas to work and, if all went well, capture the nation’s energy markets. Skilling dove into his task with characteristic dedication and emerged with a signature achievement. Called “mark to market” accounting, it provided a way for Enron to become a trading house offering gas contracts at a fixed rate, which was an unprecedented service in a freshly deregulated environment. Basically, this method of manipulation allowed Enron to count the projected revenue of an entire contract \(some conthe first year the contract was secured. “That goes against everything I was ever taught in accounting,” guffawed Enron accountant David Woytek. Indeed it did. Nonetheless, the SEC approved it. Seven years later, Skillingnow Lay’s golden boybecame CEO of Enron. Skilling then hired Andy Fastow, a Chicago banker who specialized in structuring intricate financing deals. Mark to market accounting created huge revenues for Enron and, with those revenues, the company strutted onto the international stage, selling everything from water to electricity to broadband. The international projects, however, were horribly mismanaged, leading to accurate suspicions that the expansion was undertaken strictly to collect transaction fees and pad annual bonus checks. Making matters worse, revenue evaporated as quickly as it appeared for the simple reason that mark to market profits only materialized with new contracts, and 22 THE TEXAS OBSERVER MAY 27, 2005