The Deadly Sins of Enron
By Wendy Zellner
Greed, Ego, and the Death of Enron
By Robert Bryce
PublicAffairs -- 394pp -- $27.50
ANATOMY OF GREED
The Unshredded Truth from an Enron Insider
By Brian Cruver
Carroll & Graf -- 366pp -- $25
It may take years for the courts to determine who and what are to blame for the spectacular collapse of Enron Corp. But the unofficial verdict is already in, and it's amply laid out in two new books about the bankrupt energy trader: Look no further than a culture built on greed and deception.
While that's hardly a novel conclusion to anyone who has been following this debacle, Robert Bryce's Pipe Dreams and Brian Cruver's Anatomy of Greed drive the point home with some new details that are alternately sickening and hilarious. Bryce's account is more insightful, as the veteran Texas journalist traces the many misdeeds in Houston and Washington that led inevitably to Enron's undoing. Cruver, in contrast, bills himself as an "Enron insider," but his eight-month stint in a startup unit hardly qualifies him to shed much light on the company's culture or the flawed decisions behind its implosion.
And the missteps are many. While most have been reported in some fashion in the buckets of ink spilled on the story, Bryce still packs a punch by gathering all the damning details in one place. These include, of course, the off-balance-sheet partnerships that enriched Chief Financial Officer Andrew S. Fastow and his cronies while hiding Enron's deteriorating financial state. Next, there was the easily manipulated "mark-to-market" accounting that let Enron book revenue up front on long-term deals instead of spreading it out over years. Executives abused the system to inflate bonuses while worrying little about the deals' real profitability. Finally, there were the money-losing, badly run businesses around the globe that ultimately left Enron strapped for cash and headed for a death spiral.
Bryce is most compelling when he sketches the corrupt cast of characters who steered this Titanic. Of course, there's "imperial" Chairman Kenneth L. Lay, who prefers hobnobbing with the pols he has bought and paid for in Washington rather than minding Enron. While he now claims to have been kept in the dark by Enron's self-dealing financiers, in the narrative Lay readily feeds his own family at the Enron trough. An auditor who recommends that the company switch travel agencies--eschewing one that's half-owned by Lay's sister--and soon finds himself out of a job. And Lay's grown daughter uses an Enron jet to transport her king-size bed to France.
Arrogant CEO Jeffrey K. Skilling seems clueless when it comes to running a company. When he succeeds the penny-pinching Richard Kinder as president, Skilling allows spending to spin out of control. The trading group alone drops $2 million on flowers in 1997, according to one auditor. And Skilling's ruthless performance-review committee, which weeds out 15% of "underperformers" every six months, creates a company of backstabbing yes-men.
The foibles and sexual exploits of the supporting cast are even more astonishing. Kenneth D. Rice, who heads the failing broadband unit, becomes infamous for his long-running affair with another Enron executive, Amanda Martin. Other employees watch as the two fondle one another behind the glass walls of Martin's office. Rice typically works three or four days a week and sometimes watches cartoons on his laptop during meetings. He apparently ignores warnings as early as the spring of 2000 that a coming glut of bandwidth will decimate the business.
Then there's the mysterious Lou L. Pai, another Skilling pal who rarely takes phone calls, often sits in his office alone reading the paper, and whose fascination with strippers is legendary. He even marries a former topless dancer. Like Rice, Pai is a lackluster manager who provides little oversight to a retail energy business that inflates results using questionable accounting. With this gang at the helm, the wonder isn't that Enron fails--it's that it doesn't happen sooner.
Bryce is sometimes sloppy with his facts, misspelling the last name of former SEC Chairman Arthur Levitt, for example. He gets bogged down in harangues against the politicians, including Senator Phil Gramm (R-Tex.) and President George W. Bush, who backed the laissez-faire oversight that helped hide Enron's shenanigans from scrutiny. The author's focus on how money corrupts the political process is dead right, of course, but it's hardly original.
Unfortunately, the same characterization applies to most of Cruver's "unshredded truth." He relies on newspaper accounts, an Enron board report, and other well-publicized sources to paste together his tale. Interspersed are his own meager experiences at company headquarters, the "Death Star."
A few characters in the book seem contrived, including the mysterious "Mr. Blue," a senior Enron exec who rose through the international division. When he finally bails, Mr. Blue succinctly explains the rot at the core of Enron: "The system was designed to make people rich without making real profits. The goal was to keep the stock price rising and the doubters muted--usually by sheer confusion." And despite his own lucrative career, he pronounces melodramatically: "But it cost me my soul."
In the end, Cruver seems to share such greedy instincts. As the company spirals toward bankruptcy, he nabs a free home computer before Enron can halt the employee perk. And through company ineptness, he stays on the payroll for weeks after he has lost his job. For a company that treated so many so badly, it seems just for Cruver to get some crumbs. But that take-the-money-and-run mentality was at the heart of Enron's woes.
Dallas Bureau Chief Zellner covers Enron.