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:
Jean Fritz, an award-winning writer whose work helped transform historical biographies for children from leaden recitals of battles and dates into warm, human narratives full of quirks and crotchets and satisfyingly strange facts, died on Sunday at her home in Sleepy Hollow, N.Y. She was 101.

The author of more than four dozen books, Mrs. Fritz was known in particular for her biographies of many of the signal figures of 18th- and 19th-century American history.

America's libraries got a major boost this week on Capitol Hill as a group of leading publishing, information, software, and other businesses unveiled an organized effort to advocate for federal library funding. The move comes in response to the Trump administration's proposal to eliminate virtually all federal library funding, and the agency that distributes those funds to all 50 states.

Margarita Engle has been named the Young People's Poet Laureate by the Poetry Foundation. Awarded every two years, the $25,000 laureate title is given to a living writer in recognition of a career devoted to writing exceptional poetry for young readers. The laureate advises the Poetry Foundation on matters relating to young people's literature.

Suite Française, adapted from the bestselling book by Irene Nemirovsky will premiere on the Lifetime network May 22.

Represented by the Pacific Legal Foundation, Book Passage--with stores in Corte Madera, Sausalito and San Francisco, Calif.--and co-owner Bill Petrocelli have filed suit against a state law that, the plaintiffs say, "will make it extremely risky, if not impossible, for stores to sell autographed books or host author events."

Petrocelli said that the law's "expensive mandates--with voluminous reporting requirements and draconian penalties--create a nightmare for independent booksellers that thrive on author events and book signings. Consumers will also suffer. The tradition of author events at bookstores, with opportunities for direct interaction between writers and readers, will be shattered. The cost of record-keeping and major liability threaten to make book signings impossible, and stores such as mine do not want to engage in the massive intrusion on customer privacy that is mandated by the law's reporting rules."

Several publishers and authors organizations have officially joined the many book world people criticizing Amazon's new policy allowing third-party booksellers to "bid" for the primary spot in buy buttons.

A statement from the Authors Guild called the move "deeply disturbing" and said it "has the potential to decimate authors' and publishers' earnings from many books, especially backlist books." It noted, too, that the policy might be connected with Amazon's desire to force publishers to use its print-on-demand services, if POD availability will essentially guarantee a top spot on buy buttons. Such an arrangement, the Guild wrote, "looks an awful lot like a 'tying' arrangement under the antitrust law."

The statement concluded: "Amazon has already done enough damage in the book industry. It has devalued books by setting the price and consumer expectations for e-books and hard copy books artificially low, even taking a loss to do so. And it extracts an unreasonable fee from the sale of any book through its site, as compared to the services it provides, and charges extra for things it calls 'marketing services,' such as making a book discoverable on its site. Amazon gets away with this because it has monopoly and monopsony power over the retail book industry. Without a fair and open publishing marketplace, publishers will soon lose the ability to invest in the books that advance our knowledge and culture."

A new program from Amazon is drawing a range of reactions from those across the publishing industry, from fear to downright anger. The e-tailer has started allowing third-party book re-sellers to "win" buy buttons on book pages. The program, publishers, agents, and authors allege, is discouraging customers from buying new books, negatively affecting sales and revenue.

Once every 10 years Granta issues a special issue focused on new American fiction, "showcasing the young novelists deemed to be the best of their generation--writers of remarkable achievement and promise, still in their twenties and thirties."

It's Best of Young American Novelists of 2017 list includes "21 outstanding writers who capture the preoccupations of modern America." The authors are: Jesse Ball, Halle Butler, Emma Cline, Joshua Cohen, Mark Doten, Jen George, Rachel B Glaser, Lauren Groff, Yaa Gyasi, Garth Risk Hallberg, Greg Jackson, Sana Krasikov, Catherine Lacey, Ben Lerner, Karan Mahajan, Anthony Marra, Dinaw Mengestu, Ottessa Moshfegh, Chinelo Okparanta, Esmé Weijun Wang, and Claire Vaye Watkins.

Robert M. Pirsig, author of Zen and the Art of Motorcycle Maintenance: An Inquiry into Values, died yesterday at age 88.

First published in 1974 by William Morrow, the book was a spectacularly popular philosophy book that was loosely autobiographical, tracing a father-son motorcycle trip and flashbacks to a period in which the author was diagnosed as schizophrenic. Its thesis was that quality is the basis of reality, and that this understanding unifies most East Asian and Western thought. Pirsig called this system of thought the Metaphysics of Quality.

Bestselling author John Grisham will celebrate the publication of his 30th novel, Camino Island ( June 6), with his first bookstore tour in 25 years. On his website, Grisham shares the schedule and event guidelines for the tour, which will feature a book signing and discussion/q&a at each of twelve stops.

thatware.org ©