I Survived Enron
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The current remake of Fun with Dick & Jane stars Jim Carrey as a spokesman for a giant corporation that collapses in Enron-like fashion while he's on television promoting it. Humiliated and unable to find another corporate job, Dick becomes a greeter at a discount store and a day laborer before resorting to armed robbery with his wife, played by Téa Leoni.
The real-life Enron Corp. saga is back in the news with the expected start on Jan. 30 of the criminal trial of the company's two top former executives: Chairman Kenneth L. Lay and CEO
Jeffrey K. Skilling. The case promises seething betrayal, preening lawyers, and long, dry patches of testimony on accounting. Star government witnesses such as disgraced former Chief Financial Officer Andrew S. Fastow -- the inventor of all those off-the-books partnerships -- will swear that Lay and Skilling knew about the rampant fraud. The defense will plead ignorance. Outside the courtroom, cable-TV legal experts will declare daily victories and defeats despite having no idea what's really going through the minds of the 12 jurors.
For the majority of Enron's former employees -- 31,000 once worked for the company -- life has gone on far from the scandal's glare. Thousands saw part or all of their retirement savings wiped out because, with the company's encouragement, they had put it into Enron stock. None is known to have descended to the Dick & Jane level of criminal desperation, but most haven't exactly had a red carpet rolled out for them.
Clyde Johnson, who wrote software applications and provided tech support at Enron, says that for four years he has been unable to find full-time employment because of a glut of tech workers in Houston. Last year, Johnson, a 37-year-old U.S. Air Force veteran and single parent of two, filed for bankruptcy court protection from his creditors. Now, he says, he's losing his house. "I've had employers tell me: 'You're not going to make Enron money here,"' he says.
Many Enron refugees have bounced back since the company's demise. They've turned up at Microsoft (MSFT ), Boeing (BA ), and other corporate giants. Rebecca P. Mark-Jusbasche, once the company's glamorous international dealmaker, manages a family cattle ranch near Taos, N.M., and serves as a director of a small California company that sells water purification systems to developing countries.
Some of the most intriguing post-Enron tales come from people who walked away with neither fame nor millions of dollars. Eric Thode, a public-relations employee, started a company that cleaned up bloody crime scenes. When that didn't take off, he got a business-development job at an oilfield-services company. He's also chairman of the Republican Party of Fort Bend County, Tex., where he has been organizing support lately for Tom DeLay, the indicted former Majority Leader of the House of Representatives.
After losing her job at Enron, accountant Lisa Bromiley Meier says she endured six months of potential employers asking her the same question: "So, were you corrupt or were you stupid?" Today she's the CFO of Flotek Industries Inc. (FTK ), a fast-growing maker of chemicals and drilling tools for oil companies. "There's two ways to look at a situation like Enron," says Adam Plager, who managed programmers at Enron and now runs his own software company in Houston. "You can say: 'Oh, this is horrible,' or, 'O.K., what did I learn from it?"'
"All of these people were very talented and were able to sell themselves," says Philip H. Hilder, a Houston attorney. He represents a dozen former Enron employees, including whistle-blower Sherron Watkins, who now counsels companies on ethics. She's not alone in squeezing lemonade from the ultimate corporate lemon. Kenneth Horton, who did corporate risk assessment at Enron, advises companies on how to comply with the Sarbanes-Oxley Act, the law enacted in 2002 that's designed to prevent future scandals. Horton says he doesn't mind discussing Enron with his clients: "They figure I must have learned what not to do."
In some ways, Enron already seems a thing of the dusty past. The company's crooked E, which came to symbolize an era of corporate excess, is gone from the front of Enron's former downtown Houston headquarters. One of the company's two glass office towers is now occupied by Chevron Corp. (CVX ), the kind of old-school energy business that cocky Enron executives used to snicker at. A few blocks away in a high-rise above a mall, the 300 employees who still pull salaries from Enron work at selling off its remains. Enron's name doesn't even appear in the lobby directory.
For some Enron alumni, the trial will reignite years of resentment. David Tonsall, a former energy efficiency manager, plans to work some late shifts at the Anheuser-Busch Cos. (BUD ) brewery in Houston, where he now oversees a production line, so he can attend the opening days of the trial. "Lay and Skilling ran from their troubles," Tonsall scoffs. "I say: 'Be a man and take responsibility for the things you do."' At the federal courthouse, Tonsall, a part-time rapper who goes by the name NRun, plans to hand out copies of his self-produced Enron-themed CD, which features a song entitled Drop the S of Skilling.
Here, for better and sometimes worse, are five stories of ex-Enronites. For some, such as aspiring entrepreneur Eric Eden, getting laid off was just the kick in the pants he needed. For others, such as Diana Peters and Richard Rathvon, Enron's collapse brought out their inner activist. Sanjay Bhatnagar and Andrea Miller may have been the luckiest of all: They emerged from the corporate ruins to find love.
It was June, 2002, six months after Enron sank into bankruptcy. At a conference in Crete on mathematics and finance, Vince Kaminski struck up a conversation with a French PhD candidate. He mentioned that he had worked at Enron. "She looked at me, said 'mon Dieu!', and walked away," Kaminski recalls.
The first couple of years were rocky for the man who once ran Enron's 50-person quantitative modeling group. They were the brainy researchers who calculated risks related to energy trading. The problem for Kaminski was that after Enron disintegrated, energy trading dried up in Houston. He did stints at a Chicago hedge fund and a trading outfit in Stamford, Conn., shuttling home to his family in Houston on weekends. On the plane from New York's LaGuardia airport on Friday nights, he would look around and see the cabin dotted with other Enron refugees. His wife, Ludmila, had to care for their wheelchair-bound adult son, who suffers from muscular dystrophy and lives at home. "This was a very stressful time," Kaminski says.
The risk expert had some things going for him, however. Kaminski, who was born in Poland and has a PhD in theoretical economics from the Soviet-era Main School of Planning & Statistics in Warsaw, is respected in his abstruse field. And after working at Enron for 10 years, he left without being accused of any wrongdoing.
In 1999, Kaminski says he had strongly objected to the creation of one of the off-balance-sheet partnerships that later got the company in trouble. As punishment for his impertinence, he says, then-President Skilling moved his group several floors away from the energy traders. "It was very unpleasant at the time to be pushed aside," Kaminski says, "but now I am very glad." He says he initially thought the partnerships were an unwise risk but didn't realize they might be illegal until September, 2001, when his staff was given access to information about them. (Skilling's lawyer, Daniel Petrocelli, says that his client never punished Kaminski and claims that the risk expert was "fully aware" of how the partnerships worked.)
Last year, Kaminski's luck turned. Energy trading was coming back to life in Houston. In March, he was chosen to head quantitative research for Citigroup's (C ) global commodities-trading unit in Houston. He recently edited the third edition of Managing Energy Price Risk: The New Challenges and Solutions, a $178 book that's a standard reference in its field.
Kaminski is proud of his innovations back at Enron and says that some aspects of the risk models he helped design are only now being adopted by other big companies. Still, he doesn't boast about the old days: "I try to avoid any conversation about it in public anymore."
When Diana Peters thinks about the millions that top Enron executives lavished on themselves, she says, "it still makes me sick to my stomach." They "will never be in the same financial condition I'm in."
Late 2001 couldn't have been a darker time for Peters. During Thanksgiving week her husband, Dale, was diagnosed with an inoperable brain tumor. The following Monday, when she went to work at her tech-support job at Enron, the boss announced that everyone had 30 minutes to collect their personal belongings and leave. "By 9 a.m. I had no job, my husband had a brain tumor, and I wasn't sure if I was going to have health insurance," Peters recalls. Later she learned she would lose $75,000 in retirement savings.
Peters' Enron journey had begun in 1991 when, a nurse eager for a career change, she went to work at the energy company. "I liked the fact that they were really involved in the community," she recalls. "I liked what I heard about Ken Lay," that he was family-oriented. Peters landed a job as a clerk and moved rapidly through departments, working in engineering and with the new broadband unit. "I could grow; there was a lot of potential," she says. "There was a healthy atmosphere. The people were fun."
That all changed with Enron's bankruptcy and the layoffs. Thanks to Medicare and Social Security payments, Peters has been able to cover her husband's medical expenses. He lives with her, requiring nursing care during the day. Peters, though, hasn't been able to find another full-time job. She picks up temporary work, which does not provide her with health insurance. For extra money, she and her son, Eugene, 27, clean offices on weekends. "At 55, I should have been able to retire," she says. "Instead, I'm starting over."
Even as she has toiled to make ends meet and care for her husband, Peters has found time to fight back against the company that left her jobless. She co-founded the Severed Enron Employees Coalition, which helped win additional severance payments from the company. She also mails scores of letters to politicians, judges, and other prominent figures, urging them to change federal bankruptcy law to require insolvent companies to provide, among other worker protections, health-care benefits for at least 18 months to those on medical leave at the time of the bankruptcy. It's a long-shot cause that so far hasn't yielded results, but Peters says she still has faith in government and even hope for Big Business. "We can make Corporate America respect the employee," she says, "so they're not just thrown to the streets like we have been."
Richard Rathvon was mad as hell when Enron laid him off in December, 2001. A salesman in the industrial energy unit, he got even angrier when he learned that Enron had paid 56 top traders and executives $103 million in "retention bonuses" in the days before the company declared bankruptcy. Rathvon himself was owed $140,000 for putting together a big energy deal. Where was his bonus? "It just wasn't fair," he says.
He and nine other former employees chipped in $300 each and hired Houston bankruptcy attorney David McClain. With McClain's help, the group established a special committee representing their interests in Enron's bankruptcy proceedings -- an unusual accommodation for ex-employees. Rathvon cut a deal with other creditors: In exchange for up to $13,500 each in immediate severance from Enron, the 4,500 former workers he came to represent gave up any future claims they had against the company. The Rathvon group also won the right to seek the return of the $103 million in 11th-hour bonuses.
Rathvon argued that it was fraud to enrich a few top executives just before a bankruptcy filing. Enron had been in such a rush to get the money out that it had flown representatives to meet some of the traders in airport bars, handing them checks worth hundreds of thousands of dollars apiece. Last month a federal judge in Houston sided with Rathvon and ordered the traders and executives who hadn't already settled to send their bonuses back.
It wasn't an easy march through the courts for Rathvon. A 54-year-old former lawyer with a salesman's smile and handshake, he says his wife initially hounded him to devote less time to the legal campaign and more to finding a new job. "She kept asking me for my call reports," showing which potential employers he was contacting. He's back in industrial sales, this time for Houston-based Reliant Energy Inc., and doesn't crow about his unlikely role as courtroom crusader. "It was the right thing to do," he says.
Eric Eden had spent a lot of time thinking about his lawn sprinkler, a significant concern in scorching east Texas. Eden, who lives in suburban Houston, didn't want to move his sprinkler every time he mowed the grass. He didn't like running across wet turf to reposition the thing, either. Then suddenly in December, 2001, he could ponder the mechanics of lawn maintenance at leisure. His lucrative job at Enron, drafting plans for new power plants and pipelines, had disappeared.
The father of two might have despaired. Instead, he felt liberated. He had always dreamed of starting his own business. Now he would bring the world a better sprinkler. His innovation: plant the sprinkler head in the ground and attach a hose to it when it's time to water. That way the sprinkler is positioned where the user wants it, but installation is a lot easier and cheaper than laying pipe underground.
An experienced handyman, Eden built his Original Sprinkler Station with store-bought parts and sold the first 75 at a local home show for $40 apiece. Hardware stores balked at first, but he had a breakthrough at his neighborhood Lowe's (LOW ). Soon Eden's sprinklers were selling in most Lowe's stores west of the Mississippi, and this year he'll go nationwide. At a trade show in Las Vegas in 2004, his product caught the eye of buyers for the QVC (L ) shopping channel. His debut on the network last April sold 1,800 sprinklers. He's scheduled to make his fourth appearance this spring.
Eden, 37, predicts that his company, Watering Made Easy, will gross $600,000 this year, double last year's sales. He has contracted out his manufacturing and distribution but runs the outfit from a small room just off his living room that's crammed with sprinklers and electric guitars. "It's real life here," he says, nudging aside a dirty sock.
Eden says he feels no anger toward Enron, where he worked for eight years. "Enron was about empowering you, letting you run with your ideas and succeeding or failing for yourself," he says. Without that experience, he says he wouldn't have started his own business and the Original Sprinkler Station wouldn't have had its day in the sun.
Before most people had heard of Enron's shady side deals and manipulation of electricity prices in California, the company's biggest black eye was the Dabhol power plant in India. Spearheaded by Enron's top international executive, Mark-Jusbasche, the $2.9 billion project initially symbolized the company's global vision and derring-do. And it was there, in 1997, that Sanjay Bhatnagar, a charming Harvard Business School grad supervising the project for Enron, got to know Andrea Miller, a former energy consultant on the company's international finance team.
Dabhol's high-priced power was a source of perennial controversy in India, and local politicians reneged on contracts with Enron. These troubles contributed to a critical shift within the company in the late 1990s. Mark-Jusbasche, once viewed as a possible successor to Lay, was passed over in favor of Skilling, who began de-emphasizing power projects and pipelines in favor of an "asset-lite" strategy built around the trading business he led. All this seemed like bad career news for Bhatnagar and Miller, so they left the company in the summer of 2000. Miller, now 34, got an MBA from Columbia University. Bhatnagar, 44, formed an investment partnership that bought power plants in Europe.
They defend what they were doing in Dabhol, which, they say, needed Enron's power. "It's poetic justice now that there are blackouts and brownouts" in the region, Miller says. Adds Bhatnagar: "The real story is what survived of Enron today. Ultimately it's the hard assets that are still successful." Perhaps, but not the Dabhol plant. It remains in mothballs.
Bhatnagar and Miller reconnected in New York in 2001 and this time discovered that they had more in common than respect for Enron's hard assets. Last year they were engaged to be married. "It's one of the few positive things to come out of Enron," Miller says. Today Bhatnagar is an investor in Miller's new business, Tango, a magazine that she launched last year. Miller sees it as the thinking woman's Cosmopolitan, with a sharp focus on relationships. The magazine appears six times a year and has a circulation of 200,000. Advertisers include Christian Dior and Elizabeth Arden (RDEN ).
As for their own relationship, the couple has not set a date for a wedding. Miller attributes this to the culture they learned at Enron. "We continue to work like crazy people," she says. "We just haven't had time."
By Christopher Palmeri, with Peter Coy
— With assistance by Peter Coy