Enron: The Rise and Fall

by Loren Fox

"I'd say you were a carnival barker, except that wouldn't be fair tocarnival barkers. A carnie will at least tell you up front that he's running a shell game. You, Mr. Lay, were running what purported to be the seventh largest corporation in America."-Senator Peter Fitzgerald (R-IL) to Enron CEO Kenneth Lay, Senate Commerce Science & Transportation's Subcommittee, Hearing on Enron, 2/12/02
The speed of Enron's rise and fall is truly astonishing and perhaps the single most important story of corporate failure in the twenty-first century. In Enron investigative journalist Loren Fox promises readers nothing short of the most compelling and insightful investigation into Enron's meteoric ascent-regarded by Wall Street and the media as the epitome of innovation-and its spectacular fall from grace. In a lively and authoritative manner, Fox discusses how the biggest corporate bankruptcy in American business history happened, why for so long no one (except for an enlightened few) saw it coming, and what its impact will be on financial markets, the U.S. economy, U.S. energy policy, and the public for years to come. With access to many company insiders, Fox's intriguing account of this corporate debacle also provides an overview of the corporate culture and business model that led to Enron's high-flying success and disastrous failure. The story of Enron is one that will reverberate in global financial and energy markets as well as in criminal and civil courts for years to come. Rife with all the elements of a classic thriller-scandal, dishonest accounting, personal greed, questionable campaign contributions, suicide-Enron captures the essence of a company that went too far too fast.

Genres: Business, Nonfiction

400 pages, Paperback

First published August 31, 2002

Reviews

[Brian · Rating 3 out of 5]

Fox provides a critical link in the Enron story by focusing on a company history. This book is not really the story of Lay, Skilling and Fastow and the fall of Arthur Anderson. This is a book on how Enron the company rose to prominence and fell just as quickly. From the commoditization of energy trading to the asset light strategy that the company adopted the reader is taken on a step by step process of how the company fell. It is a careful business analysis and not a narrative so if you do not have experience reading and understanding business terminology this is probably not the book for you. This book does not delve into the stories behind the company so if you want the book that will vilify those who ran the company you will have to look elsewhere. For those who simply want a company history of Enron then this is for you.

[Themistocles · Rating 2 out of 5]

A mixed bag, this one. It does give some aspects on Enron's legitimate and early business-making, thus providing some less catchy but still interesting info. But, on the other hand, it totally fails to flesh out the characters involved and portray the high drama that occurred. Even during the company's dramatic last weeks, it reads as if everything was calm and easy-going.

In the end: rather boring...

[Steven H · Rating 5 out of 5]

A NOT UNSYMPATHETIC PORTRAIT OF THE FORMER CORPORATE GIANT

Business journalist Loren Fox wrote in the first chapter of this 2003 book, "The Enron story... is a tale of genuine achievement, but also of arrogance, ambition, and deceit. It's the story of how so many people and agencies missed the cracks in Enron's facade, in part because the system was set up that way. In short, it's the story of how American capitalism worked at the close of the twentieth century." (Pg. 6-7)

He notes, "Despite the company's attempts to hire a mix of men and women, Enron had within it a boys' club typical of trading rooms that reveled in rowdy times involving members of the opposite sex and strippers. Not surprisingly, sexual hi-jinks resulted in rumored sexual harassment complaints from some female employees. Even married traders and executives boasted of womanizing." (Pg. 93)

He observes, "As [Jeffrey] Skilling's stock was rising within the company, Enron took on more of the entrepreneurial and extremely competitive personality that he had hoped to fashion. Unfortunately, it could also be a greedy, self-involved, overconfident personality---and those characteristics sowed the seeds of hubris." (Pg. 97) He points out, "Not surprisingly, Enron's executives did well... the real value came in stock options... Throughout the 1990s, stock option grants continued to grow... Enron's top executives benefited even more from the options they'd been granted in the past." (Pg. 173-174)

He says about California's power crisis, "California had an excess of power supply when it passed its deregulation law... Then unusually warm weather hit... Power prices continued to rise along with the mercury... But consumers had no incentive to change their power-using habits: Thanks to the deregulation law, their rates were frozen even as wholesale prices soared for the utilities... The high power prices also made it clear that not enough new power plants had been built in California to keep pace with demand; people in the energy industry explained that California's environmental laws and the low wholesale prices for power in 1998 and 1999 discouraged the building of new plants...


"Many observers suspected that energy traders were gaming the system a little---by, say, withholding power they would deliver in the morning until the prices rose further in the afternoon--- [but] were legal tactics exploiting a poor market system... California residents, and especially politicians, bridled at the profits that Enron and others seemed to be making off their troubles." (Pg. 198-200)

In a pep talk to employees, CEO Ken Lay "told his employees that Enron's vision was to be the world's leading company, and he felt it could possibly reach that goal within five years. Lay either didn't suspect or didn't reveal the true extent of the company's troubles. Enron would have less than five months, let alone five years." (Pg. 246)

He observes, "Enron had its back to the wall, and regaining the trust of Wall Street would be daunting... With a massive trading business that lived or died on credit, Enron just didn't have that kind of time." (Pg. 277)

As the company was collapsing, "People just stopped working... Traders went out and bought a bunch of vodka and beer and got drunk on the trading floor." (Pg. 284) When a proposed merger fell through, "Enron had nothing to fall back on. Following Skilling's philosophy, the company had emphasized 'virtual' assets, such as intellectual property, a talent to innovate, financial acumen, and reputation. But, unlike a factory or a pipeline, those intangible assets can decrease in value suddenly. That's what happened to Enron. Suddenly, all those intangible assets seemed worthless." (Pg. 285)

Yet even then, "some of those who remained at Enron benefited from the company's desperation. Around the time of the latest round of layoffs... just before declaring bankruptcy Enron paid out $55 million in special 'retention' bonuses to roughly 500 employees it deemed critical. Enron needed top employees to remain if the company would survive, so it justified the payments as 'necessary to maintain and protect the value of the estate.'" (Pg. 291)

Those interested in the story of Enron may also want to read 'Conspiracy of Fools: A True Story,' 'The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron,'' Anatomy of Greed: Telling the Unshredded Truth from Inside Enron,' 'What Went Wrong at Enron,' 'Power Failure: The Inside Story of the Collapse of Enron,' 'Pipe Dreams: Greed, Ego, and the Death of Enron,' etc.

[Ryan Manganiello · Rating 5 out of 5]

Although I am quite familiar with the story of Enron, I love to learn about topics I'm interested in from all different sources and perspectives, and this book certainly did not disappoint.

It still and always will boggle my mind how a once valued at $100 million dollar publicly traded company can go to zero so quickly, and all the so called experts had no idea it was going to happen.

So sad... and a lesson for all.

[LW · Rating 1 out of 5]

The spelling mistake on the very first page should tell you everything you need to know

[Kaylah Hancock · Rating 3 out of 5]

Not really what I was expecting. This is a book about the history of Enron, going all the way back to the 80's when two company's merged to create the Enron that would change everything. I'm more interested in the later years of the company so this wasn't what I was looking for.

The book in general was a dense read filled with inner workings of the industry. It was very informative and if I was interested I would be more inclined to finish it. However it just wasn't at I was looking for.

[E · Rating 2 out of 5]

I officially give up on this book. It is terrible, I know. But it simply doesn't hold my interest long enough for me to make any progress. I declare it - done.