Enron has been hashed and rehashed, but I haven't seen a more thorough discussion about what happened and how than The Smartest Guys In The Room: The Amazing Rise and Scandalous Fall of Enron, by Bethany McLean and Peter Elkind.
If you have any interest in the sticky wicket of corporate ethics, you've gotta read this book. Bethany McLean, who wrote the original article that helped start the ball rolling on Enron's inevitable collapse, and co-author Peter Elkind have done a masterful job documenting the rise and fall of Enron, an energy company that was, more or less, a tissue of lies.
The amazing things that stick out in my mind are how easy it was for almost all the participants in the unquestionable fraud that was Enron to justify what they were doing, to themselves and many others, before and even after the collapse. And how worthless it all was--most of them weren't very happy, even when Enron was riding high. And, for a few extra million bucks, they've pretty much made a mess of their lives.
The authors seem incredulous that, after giving the copious documentation of poor management and outside fraud, that most of the former Enron executives consider themselves victims of everything except their own greed and incompetence.
Yet does it surprise anybody reading that a company who was run by a management team that considered the most relevant aspect of Enron's business to be that "it was a really cool company" was, in fact, a mess? That the "loose-tight" management practices and Enron and praised by consulting firm McKinsey consulting were, in fact, all loose? McKinsey, a consulting firm that prides itself on radical management thinking and outside-the-box creativity (Tom Peters, one of McKinsey's most famous former employees, has made a very good living advocating management practices, and certainly attitudes, not so different from what Enron put into practice) has since tried to distance itself from its close relationship with Enron, and the authors don't pursue that connection very doggedly. But I am prone to wonder if, in a way, McKinsey isn't just as complicit as Arthur Andersen was in contributing to the debacle that was Enron.
Although McKinsey didn't actively participate in the fraud, book-cooking, legal manipulations, and outrageous debt that eventually brought Enron down--at least, not directly--certainly the McKinsey attitude was exhibited all throughout Enron. Certainly, Jeff Skilling--as guilty as anyone in Ernon's downfall--would have been a proud McKinsey case study, before the fall. He managed Enron "loose-tight", he hired creative and talented people with no experience in the Energy industry, he "innovated" with all sorts of new non-managing management techniques. He was a McKinsey golden-boy.
Somewhere out there, I'm sure there were some Tom Peters' seminars extolling the virtues of Enron's modern management and "super cool" corporate culture. The fact that the company cooked the books while leaking money all over the place not withstanding.
But, Arthur Andersen is out of business and the company that probably contributed more to the mindset that eventually put Enron out of business is still doing pretty well. Too bad nobody at McKinsey or Arthur Andersen suggested Enron might benefit from, say, talented people with actual experience in the energy industry. Or real oversight. Or actual cashflow.
Another interesting point made by the authors is the complicity of the analysts, who, unlike Arthur Andersen or Citibank, had no real vested interest in covering up the fraud. Yet, they touted Enron, even while observant short-sellers decided Enron was fatally flawed beneath the surface, and ended up reaping a windfall on their shorted positions, with no more information that was publically available.
If we take nothing else from the sad tale of Enron, I hope we at least take this: mark-to-market accounting, that allowed Enron to legally book future profits, sometimes profits that would accrue over 20(!) years, as profits for that quarter, is little better than SEC-sanctioned fraud. Thus, while making almost no real money, Enron booked huge deals where the real money was far off in the future, paid huge bonuses to the deal makers on projected (re:made up, often wildly optimistic) profits, and thus, on that score, legally defrauded the stockholders.
A great anecdote is the one where, while the stock price is plunging into the toilet and it's becoming clear Enron is going to have to be bought, or go belly-up, Ken Lay asked Jeff Skilling to help him choose from the fabric swatches he has for the new interior of their just purchased G5 corporate jet.
It's a good book and, if you're like me, you'll shake your head in wonder quite a lot. What the hell were they thinking?
Seriously, they are. Which is a good thing. Using a modern secular myth to justify looting the private sector and punishing the tax payer is reprehensible, and the more people who wake up to the same, the better.
The Jawa Report has a breakdown on how Axelrod and the Obama campaign are trying to make fake grassroots campaigns to smear Sarah Palin, while, at the same time, leaving a trail of smoking guns everywhere. No wonder the left like's to tell us they are the smartest and most ethical folks out there!
The Journal of Feminist Insight blog has a breakdown of softballs Charlie Gibson tossed Obama vs. the prosecutorial nature of his questions for Palin. Pretty damning stuff, indeed. For Obama: How does it feel to win? For Palin: Do you have enough qualifications for the job your seeking? And on and on and on.
Not classy, Charlie.
Apparently to folks of the left, the ends will always justify the means. Ruin people, lie, cheat, steal, anything short of murder (and, hmm, who knows, maybe that, too) is okay if it means you get universal healthcare and progressive taxation. Learning that, on the left, the end always justifies the means is why I'm not a liberal today.
