Enron Debacle: Review Of Kurt Eichenwalds Conspiracy Of Fools A True Story


Title: Conspiracy Of Fools: A True Story Author: Kurt Eichenwald Publisher: Broadway Books (A division of Random House) ISBN: 0767911784

As I reached the end of the 675 - pages of Kurt Eichenwald's saga of Enron recounted in Conspiracy of Fools A True Story, I walked away shaking my head in disgust and at the same time shock!

Award winning journalist, Eichenwald, has written for the New York Times for more than seventeen years. Letting the facts tell the story, Conspiracy of Fools, A True Story, is based on the author's more than one thousand hours of interviews he conducted with over a hundred participants. Combing through thousands of confidential corporate and government documents, contemporaneous records, personal diaries, and best recollections of the participants, the author delivers a compelling and superb recounting of just what transpired- all with believable dialogue.

It is difficult to conceive just how was it possible that a prestigious accounting firm, Arthur Anderson & Co, could with just a wink and nod accept the creative accounting shenanigans that were practiced at Enron? Although, it should be noted that Enron, at the time and prior to the change in the rules of acceptable accounting practices for energy companies, was legally permitted to use "mark to market" accounting, which allows companies to count as current earnings, profits they expect to earn in the future, from energy-related contracts. This was very cleverly used to prop up the balance sheet, keeping the banks and credit raters content.

Can we honestly believe that so called "smart" business people like Ken Lay, Enron's Chairman and CEO and Jeff Skilling, its President, did not know about or were not concerned with the fraudulent activities of their chief financial officer, Andrew Fastow?

Even until the end of his days at Enron, Fastow never did explain in a precise manner the poor financial condition of the company that had been the result of his incompetence and venality.

Furthermore, through the ineptness of Fastow, Enron was not tracking their cash in order to know when they were experiencing shortfalls-an essential requirement to know when and if they could pay their bills. Apparently, nobody had a clue as to how much daily cash was collateral posted by trading partners and how much was coming in from the business.

What is so mind-boggling is Fastow's paradoxical behavior. He may not have understood basic business principles or Finance 101, however, he was quite clever in swindling from Enron over sixty million dollars with his masterminding of off -the- books personal partnerships, wherein he hid billions of dollars in debt and artificially boosted the company's profits. As long as the share price of Enron was propped up and be damned at everything else, everyone went along for the ride without digging too deeply and asking too many questions. The old adage, "hear no evil, see no evil."

Eichenwald also brings to light how Enron became involved in all kinds of activities that had little to do with their principal line of energy business. As the author states, under the stewardship of Skilling, Enron was changed into a radically different beast.

This all led to Enron's pursuing of contradictory strategies and a loss of focus, wherein you had at the one end dealings that brought in huge earnings with little cash that were dependent on Enron's credit rating. On the other hand, you had activities devouring huge amount of cash, while producing very little earnings for years that would potentially put their credit ratings at risk.

Furthermore, our CFO, Fastow, did not have the foggiest idea about how to calculate investment returns!

You had a company that lied to its investors, hid losses to make itself look good, and executives who siphoned off company funds, all under the noses of their top officers.

A recipe just waiting for disaster!

In all fairness, I should add that there were several executives, who to some degree, did complain about some of the creative accounting that was going on at Enron.

This is a remarkable and engrossing read that chronicles a multi-billion dollar sham that came to light in 2001.

One question, however, still lingers on in my mind, how many more Enrons are there lurking in the shadows? Will we ever put an end to this shameless behaviour on the part of some public companies? Just ponder the wider effects it has on innocent employees, who not only loose their jobs, but also in many instances, their life savings and pension plans?

Just in passing, Ken Lay has been indicted and faces criminal charges that include security and wire fraud and making false statements. Jeff Skilling, likewise, faces thirty- six charges, including fraud and insider trading. Fastow has pleaded guilty to two counts of wire and securities fraud and is now serving a ten- year sentence without parole. He has agreed to co-operate with the authorities. Stay tuned.

Norm Goldman is the Editor of the book reviewing site, www.bookpleasures.com">http://www.bookpleasures.com and the travel site, www.sketchandtravel.com">http://www.sketchandtravel.com.

Norm is also a travel writer and he and his artist wife, Lily Azerad-Goldman meld words with art focusing on romantic destinations.

Bookpleasures.com comprises a group of over 25 prestigious international reviewers who review all genre. There is also a section on the site devoted to author interviews.

All book review requests are welcomed.


MORE RESOURCES:
Librarian of Congress Carla Hayden announced today that Richard Ford, author of "Independence Day" – the first novel to win both the Pulitzer Prize and the PEN/Faulkner Award – will receive the Library of Congress Prize for American Fiction during the 2019 Library of Congress National Book Festival on Aug. 31.

In 2015, with the purchase of the Shakespeare & Co. name in the U.S. and the successful acquisition of a lease to the store's former 5,000 sq. ft. location on Lexington Ave. on New York's Upper East side, Dane Neller, cofounder and CEO of On Demand Books (the maker of the Espresso Book Machine) and a group of investors took the first steps toward creating an indie bookstore chain. While Neller and friends are still shy of the number of locations that their namesake had at its height, six stores in New York City, the group plans to surpass that number next year...

The bestselling author who accused her husband of poisoning her was jailed for direct contempt after a court hearing last month.

Kenyon was accused of calling one of her husband's attorneys a "f---ing liar" as she abruptly left the courtroom during the hearing on April 23. After returning to the courtroom minutes later, she accused one of her husband's family members of being a pedophile.

Herman Wouk, the Pulitzer Prize-winning author of the Navy drama The Caine Mutiny, whose sweeping novels about World War II, the Holocaust and the creation of Israel made him one of the most popular writers of his generation and helped revitalize the genre of historical fiction, died May 17 at his home in Palm Springs, Calif. He was 10 days shy of his 104th birthday.

Faber emerged victorious at the British Book Awards 2019 on Monday evening (13th May), with Sally Rooney's Normal People scooping the coveted Book of the Year award. The book had earlier won the Fiction Book of the Year prize, while Faber stablemate Leila Slimani's Lullaby won the Debut Fiction category. The 90-year-old company also took the Independent Publisher of the Year gong in the trade section of the awards.

Jean Vanier, founder of L'Arche communities for adults with learning disabilities, living alongside those without them, has died aged 90.

In August 1964, having giving up his job teaching philosophy at the University of Toronto, he bought a small, rundown house without plumbing or electricity in the village of Trosly-Breuil, north of Paris, and invited two men with learning disabilities – Raphaël Simi and Philippe Seux – to share it with him. Both had been living in an asylum and were without family. Today L'Arche (the ark) has 150 communities, in 38 countries, supporting 3,500 people with learning disabilities.

Vanier wrote 30 books on spirituality and community, including Community and Growth (1979), Becoming Human (1998), Befriending the Stranger (2005) and Life's Great Questions (2015). In 2015 he was awarded the £1.1m Templeton prize, for making "an exceptional contribution to affirming life's spiritual dimension".

The Poetry Foundation has announced Marilyn Nelson as the winner of the 2019 Ruth Lilly Poetry Prize, Naomi Shihab Nye the 2019–2021 Young People's Poet Laureate, and Terrance Hayes winner of the 2019 Pegasus Award for Poetry Criticism. The awards are sponsored and administered by the Poetry Foundation, an independent literary organization and publisher of Poetry magazine, and will be presented at the Pegasus Awards Ceremony at the Poetry Foundation in Chicago on Monday, June 10.

Novelist Ben Dolnick waxes lyrical on the benefits or ditching Netflix for a novel. And not just because a novelist is telling you to:

One night a couple of summers ago, the power went out and, unable to watch Netflix or engage in my customary internet fugue, I lit a candle and picked up a thriller by Ruth Rendell. For the first time in as long as I could remember, my sole source of entertainment for an evening was going to be a book...

Cengage and McGraw-Hill, two of the largest academic publishers remaining, have agreed to a merger on equal terms that is expected to close by early 2020, the companies announced yesterday.

Baker & Taylor has made it official: it is leaving the wholesale retail book market. The move was hinted at when it became public late last year that the company was in talks to sell its retail operations to Ingram and then in the departure over the last few months of key retail staff members. B&T will focus on its traditional core business of servicing libraries, as well as publisher services...

Paul Swydan, owner of the Silver Unicorn Bookstore, West Acton, Mass., wrote on Twitter, "It means I will make less money when I fill special orders for customers, because Baker & Taylor's sole competition offers a much lower discount." He added, "In the larger sense, it's another example of how Amazon is crippling this country in their mostly unchecked quest to monopolize any business they choose to focus on."

thatware.org ©