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August 15 - August 31, 2020
The tale of Enron is a story of human weakness, of hubris and greed and rampant self-delusion; of ambition run amok; of a grand experiment in the deregulated world; of a business model that didn’t work; and of smart people who believed their next gamble would cover their last disaster—and who couldn’t admit they were wrong.
Mergers that sound good on paper often wind up facing a far harsher reality.
easy money is rarely as easy as it looks;
“My job as a businessman is to be a profit center and to maximize return to the shareholders. It’s the government’s job to step in if a product is dangerous.” (Skilling has always denied this story.)
Operating on the belief that intellectual brawn is more important than practical experience,
He wanted to create a place where raw brains and creativity mattered more than management skills and real-world experience,
Ask a candid question, get a canned answer,”
“They were people who couldn’t take no for an answer. They couldn’t even take no from reality.”
I said, ‘Quit!’ ” the dealmaker recalled. “He said, ‘I have to stay because I’m making a ton of money.’
Internet mania, an era in which there was a complete suspension of healthy skepticism and disbelief.
The Enron scandal grew out of a steady accumulation of habits and values and actions that began years before and finally spiraled out of control.
There was an absolute conviction at Enron that clever accounting could alter the business reality.”
In their view, they were doing what every other company was doing, except that they were doing it better and smarter, because they were Enron, where everything was done better and smarter.
consulting would play a major role in corrupting both the accounting profession and Andersen itself.
The pressure to generate fees was intense, and so was the pressure to hold on to clients.
This is still the business model / problem.
Sure, they were stretching the rules, but the Andersen team always had a rationale as to why they weren’t breaking the rules.
Every bit as much as the accountants at Arthur Andersen, the banks and investment banks were Enron’s enablers.
“The approach was, ‘Let’s sell it—and we’ll figure out everything else later.’
(Internet companies all had to have funky quarters; it was part of the ethos.)
“The overriding philosophy at Enron is that if you’re going to do something, don’t dabble. Do it in a big way, and do it fast.”
There was a mania and a sense of bravado, and it truly reached a level of lunacy.”
the core rule of trading: information is even more important than brains.
“I’ve decided that budgets and management oversight is the wrong way to go,”
in Enron’s world, talent meant thirty-somethings with MBAs from all the best business schools. What did it matter that they didn’t know a thing
By the end of the summer, California was in full-crisis mode.
Isn't California always in crisis mode though?
Enron was promising to establish a profitable new entertainment business by streaming programming for consumers, such as on-demand movies and sports events, over its global broadband network.
the cable-television industry, a modern cabal if ever there was one,
Cox had landed an exclusive 20-year agreement with Blockbuster,
lol
The movie chain had wanted to explore the video-on-demand business—though it had already concluded that VOD was far too expensive and technically difficult to turn a profit for years.
Arthur Andersen partners, including eight based in Houston—David Duncan among them—held a meeting to discuss whether to retain Enron as a client. Andersen has insisted this was a routine meeting, but the topics seemed to be anything but routine.
Not at all routine.
“You always know where Fallon is standing,” says another trader. “Behind you with a knife.”
Compass Bank,
Andersen had made mistakes in the past, as recent scandals at other Andersen clients showed.
If Andersen had done its job properly, Lay complained, “we wouldn’t be here today.” True enough.
Wasn’t the directors’ responsibility broader than merely listening to “the information provided to them”?
the New York Post carried a picture of Lay and a casket, accompanied by the giant headline: BEFORE THEY PUT CHEATO LAY’S COFFIN IN THE GRAVE CHECK HE’S IN IT
