Enron's Andrew Fastow: The Mistakes I Made

Photograph by F. Carter Smith/Bloomberg

Andrew Fastow, the former chief financial officer at Enron who pleaded guilty to two counts of conspiracy, forfeited nearly $24 million, and spent more than five years in prison for securities fraud, is sharing his story with business students. To start, Fastow, a graduate of the Northwestern University’s Kellogg School of Management, recently spoke with students at the University of Colorado–Boulder Leeds School of Business. There are already others like him—white-collar criminals—who are making the rounds at B-schools. The idea is to teach future leaders what not to do.

After reading a Bloomberg Businessweek article co-written by Leeds Dean David Ikenberry about the need to teach ethics at business schools, Fastow reached out to the school and offered to make the visit. “I was initially taken aback,” says Ikenberry. “I was personally aware of his story because I started my career as a finance professor at Rice University in Houston [where Enron was headquartered]. … I had personal awareness of the human tragedy—the suicides, divorces, those who lost everything, the toll on corporate America, etc. Enron is one of our world’s greatest corporate tragedies.”

For those who don’t remember, Fastow was more than a bit player in that tragedy. It was Fastow who designed the complex web of “off-balance sheet” companies that allowed Enron to hide its true financial condition from investors. A year before the implosion, the stock was trading at $90 a share, an all-time high. When the truth finally came out, shares were going for 40¢ apiece. In December, Fastow was released from the Houston halfway house where he spent the last few months of his sentence. He now works for a Houston law firm that represented him in civil matters, says Lee Kaplan, a partner in the firm. His title: document review clerk.

Although Fastow was the one who initiated this speaking event, which took place Monday night, he told one student who asked how much money he still had that it was no one’s business, according to an article about the speech in the Denver Post. Still, Ikenberry says that Fastow conveyed contrition and deep regret for what he did without making excuses. And, adds Ikenberry, Fastow tried to provide students with an important lesson. Ikenberry said he began by explaining how he ended up crossing the line from doing the right thing to committing a crime.

“There are people who look at the rules and find ways to structure around them. The more complex the rules, the more opportunity,” Fastow said, according to the Post. “The question I should have asked is not what is the rule, but what is the principle.”

Contacted by Bloomberg Businessweek, Fastow declined to comment. Student reaction to Fastow’s comments and presence was just what Ikenberry wanted, he says. “At a personal level, students came to terms with their own values,” says Ikenberry. “In their day-to-day lives, their principles need to stand out always.”

Good advice. If only someone had given it to Fastow 14 years ago.

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