Readers interested in the Enron debacle have a number of books with which to sate said interest. That number, published between 2002 and now lingers somewhere between 10 and 20. That number is hardly overkill considering the acres of destruction left by the defunct energy-water-broadband concern. While interested readers will want to read more than one author’s perspective, it is difficult to decide which authors and which perspectives.
There are several well-written and annotated accounts of the fall of Enron. Perhaps the two most notable are Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron by Bethany McLean and Peter Elkind and Conspiracy of Fools: A True Story by Kirk Eichenwald. These books are exhaustively researched and include copious amounts of Harvard MBA jargon that, while not impossible to wade through, could not be considered a breezy read.
No, these books are not where to start; they should be considered a main course, after a preparatory appetizer. Pipe Dreams: Greed, Ego, and the Death of Enron by Robert Bryce is such a course. Bryce, an investigative reporter in Houston presents the entire Greek tragedy of Enron.
While Bryce does not shirk the business particulars, carefully defining in concrete terms stock options, mark to market accounting, derivatives, and futures contracts, he focuses on both the personalities within Enron and their relationships with each other and the government. He traces the evolution of the energy business in south Texas, providing the backdrop for the genesis of Enron and its subsequent rise, decline and fall. He addresses the company leaders, the blindly ambitious and clueless Ken Lay; the brilliant and brilliantly flawed Jeffery Skilling; the Pandora, plutonium-laced Rebecca Mark; and the too-bright-for-his-own-good Andrew Fastow, who, with his off-balance sheet special purpose entities, enriched himself and knocked the last leg from beneath Enron.
Pipe Dreams is not a book for the faint of heart. It is written in a corrosively sarcastic voice laced with the brutal poison of “I told you so.” Bryce even has the queen of such writing, the unsinkable Molly Ivins, introduce the book. Bryce for the most part contains himself in his voice, but cannot resist throwing a few grenades, such as his explanation of why Enron failed:
"It’s an expensive word, a word that has defined civilizations — and companies — for generations. It was the culture, stupid.
Fish rot at the head.
Enron failed because its leadership was morally, ethically, and financially corrupt. "
But no other grenade was quite a ribald as this one he hurled at President George W. Bush, who was waist-deep with Enron back in the day:
“And though the paper didn’t ask about the Enron-[Charles E.] Walker connection, Bush offered the comment that he and the Enron lobbyist were ‘simpatico.’ Ah, yes, simpatico. If Bush had been anymore simpatico with Enron, he could have been charged with a misdemeanor under the state of Texas’s buggery laws.”
That is spanking good writing.
Once the reader gets used to the tone of the book, Bryce introduces all of the major players: Ken Lay, Jeff Skilling, Andrew Fastow, Rebecca Mark, Lou Pai, Rick Causey, Ken Rice, and Greg Whalley. Bryce carefully leads us through the myriad of deals and side companies, the books accounting and the many personal affairs of Houston’s “Big Rich.” This is a story of ancient Roman excess, in terms of both cash and egos. The reader would not be surprised if an orgy suite and vomitorium showed up in the Enron digs.
Pipe Dreams is truly an exciting read, one that accelerates as the reader nears the end, of both the book and Enron. There were many last straws for Enron, but I suspect that the public beginning-of-the-end occurred when analysts at John S. Herold began to question the veracity of Enron’s stock price. In February 2001, Herold analysts released a report stating that Enron’s stock was overvalued. They were able to do this because they were not investment bankers - they were research bankers who sell their reports to fund managers, investment houses and the like, and as such could not be intimidated by Enron because they were truly independent.
From this point forward the book and Enron’s stock price and cash flow race downhill. While I am sure at the time this was a slow-motion train wreck, it reads like the detonation of a financial nuclear device making waves that continue today to crash on the world’s financial shores.
Pipe Dreams ends June 17, 2002 with Enron’s stock at $0.11 a share and Ken Lay’s wife and daughter hawking their plunder at a “Salvation Armani” called “Jus’ Stuff” while legions of less fortunate Houstonians picket outside, shouting for their Marie Antoinette to ascend to the scaffold.
This review was first published in Blogcritics.org
© Copyright, C. Michael Bailey, 2006