Before we too gushy about poor old Jeff Skilling and Ken Lay et al, read a book called, "The Smartest Guys In The Room".  Enron dug it's own grave with the same nefarious practices that it tried to use to dig itself out.

Be forwarned:  People with integrity will want to take a shower every few pages.

That's Bethany McLean's book, right?

Had to wash my hands every 10th page.

I think she may have been the first journalist to question a few things about Enron. Can't recall if Jeff Skilling called her an asshole, though.

I was not called an asshole. I just listened in on the confie call (did not ask any questions). I remember that "asshole" comment to Grubman like it was yesterday. My first thought was, "Skilling's trying to cover something up if he got that hot over Grubman's questions."

[quote=ymh_ymh_ymh]

Mike Butler, to my recollection, Dear Abby was NOT on that confie call so I guess she's got an excuse.

[/quote]

Everyone from Fortune mag to Forbes to everyone on Wall St who believed the doctored books has an excuse. If they hadn’t all been lied to the DoJ wouldn’t have had a case against Enron, Skilling, Lay Arthur Anderson, et al.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

As to the shortseller, I don't know the details of his questions, but it isn't outside the realm of possibility that he was just what Skilling called him because he was "right" for the wrong reasons. Shortsellers often are.

You found Skilling's attitude to be offensive.  Is it illegal to have an air of arrogance?

Was their business model illegal--or just not very customer friendly?

If you had been in charge which choice would you make?

1.  Report things as they are and watch the stock zero out

2.  Take the creative accounting path and if caught watch the stock zero out

3.  Take the creative accounting path and if not caught perhaps watch the stock zero out

4.  Take the creative accounting path and if not caught perhaps watch the company return to solvency

Three out of the four choices were going involve the stock zeroing out--they opted for the only chance they had and it damn well may have worked except for the scorned woman.

Were the leaders sympathetic figures?  Of course not, but it is not illegal or even immoral to be a swaggering figure liviing large.  As I said they were not using the company as their personal piggy bank like happened at Tyco, Worldcom and Adelphia.

Sarbanes-Oxley was not codified until AFTER Enron imploded--it is wrong to think of them as having been convicted of Sarbanes-Oxley offenses.

[quote=Starka]

Before we too gushy about poor old Jeff Skilling and Ken Lay et al, read a book called, "The Smartest Guys In The Room".  Enron dug it's own grave with the same nefarious practices that it tried to use to dig itself out.

Be forwarned:  People with integrity will want to take a shower every few pages.

[/quote]

I think the book was essentially right about Skilling wrong about Lay, and wrong about a number of other folks it tarred (I happen to know a couple). <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The sad truth is don't expect fairness and honesty when the mob and the press (often the same group) moves in after the battle  to shoot the survivors. At that point they know they’ll sell more books by painting the picture as the potential book buyer wants it.

I didn't short Enron until after that confie call. I was flat, had sold out because a friend of mine who trades natural gas futures told me his father heard a few things which were "disconcerting." His father was a partner at V&E in Houston.

The way Skilling reacted when Grubman asked those questions was all it took for me to decide he was hiding something. At the time, I don't even Grubman knew how bad it was in there. I sure as hell did not.

[quote=ymh_ymh_ymh]

I didn't short Enron until after that confie call. I was flat, had sold out because a friend of mine who trades natural gas futures told me his father heard a few things which were "disconcerting." His father was a partner at V&E in Houston.

The way Skilling reacted when Grubman asked those questions was all it took for me to decide he was hiding something. At the time, I don't even Grubman knew how bad it was in there. I sure as hell did not.

[/quote]

If it was that easy to understand why do you suppose so many people got burned?

They listened to the sell side analysts who were shilling for Enron’s investment bankers?

[quote=ymh_ymh_ymh]They listened to the sell side analysts who were shilling for Enron's investment bankers?[/quote]

You really think that was the extent of it? Then the DOJ was lying when it said the books were cooked and gave AA the death sentence.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The auditors had a role in it, too.

Most firms have their sell side analysts covering entirely too many securities which means it's hard to truly know any one of them inside out plus there's still pressure NOT to piss off any firm's execs if they do investment banking biz with the firm. It's all about REVENUE, you know.

[quote=ymh_ymh_ymh]

The auditors had a role in it, too.

Most firms have their sell side analysts covering entirely too many securities which means it's hard to truly know any one of them inside out plus there's still pressure NOT to piss off any firm's execs if they do investment banking biz with the firm. It's all about REVENUE, you know.

[/quote]

If Anderson was covering up, and the Enron executives were covering up there is no reason to blame analysts who were simply going on what they were being told.

I think the one common ground is that there was a coverup of reality--where disgreement sets in is the motivation for the cover up.

I maintain it was a last gasp effort to right a sinking ship.  A ship that was sinking due to sudden fluxuations in its income versus expenses ratios more than some rampant disregard for laws or even prudent business objectives.

Prior to that confie call (May I think it was) before Enron blew up 6 months later I don't blame the sell side analysts.

That confie call should have made them ask a few questions, too, but it did not. Maybe they were too busy or something.

[quote=ymh_ymh_ymh]

The auditors had a role in it, too. [/quote]

I think "a role" is a little light considering, for the first time ever, the audit firm was given the death sentence by the DOJ.

[quote=ymh_ymh_ymh]Most firms have their sell side analysts covering entirely too many securities which means it's hard to truly know any one of them inside out ...[/quote]

Oh, come on, Enron was #7 on the Fortune 500, a "most innovative company" at Forbes and had boatloads of analysts covering it. The fact is the flaws in the balance sheet were hidden.

[quote=ymh_ymh_ymh]...plus there's still pressure NOT to piss off any firm's execs if they do investment banking biz with the firm. It's all about REVENUE, you know.

[/quote]

That's always a danger. OTOH, if your theory explained actions in this case there would have been plenty of buy siders running out of it, if not shorting it. Instead, you see buy siders among the worst hit.

Frankly, unless this famous shortsider was speaking specifically about debt being moved off the balance sheet to the infamous partnerships, he was just doing what all shortsiders do, and that's no proof that he found anything other than a rapidly growing firm with a chart pointing up at a 75 degree angle.

Mike, it’s too bad you weren’t on that confie call. Merrill’s shill Donato Eassey was.

[quote=mikebutler222][quote=Starka]

Before we too gushy about poor old Jeff Skilling and Ken Lay et al, read a book called, "The Smartest Guys In The Room".  Enron dug it's own grave with the same nefarious practices that it tried to use to dig itself out.

Be forwarned:  People with integrity will want to take a shower every few pages.

[/quote]

I think the book was essentially right about Skilling wrong about Lay, and wrong about a number of other folks it tarred (I happen to know a couple). <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The sad truth is don't expect fairness and honesty when the mob and the press (often the same group) moves in after the battle  to shoot the survivors. At that point they know they’ll sell more books by painting the picture as the potential book buyer wants it.

[/quote]

I can't claim to know any of the players, but I will speak to the validity of the book.  It isn't billed as a work of fiction, so it has to be essentially true or run the risk of an huge libel lawsuit.  While I'm sure that there are various levels of guilt, I can't agree that there are any innocents at the upper levels.  It seems to me that any time there is a major departure from GAAP, one would be well adivsed to take a close look at whole.  Further, I don't think these accounting schemes were developed after the fact in order to save the company...these schemes were the source of Enron's troubles as well.

[quote=Starka][quote=mikebutler222][quote=Starka]

Before we too gushy about poor old Jeff Skilling and Ken Lay et al, read a book called, "The Smartest Guys In The Room".  Enron dug it's own grave with the same nefarious practices that it tried to use to dig itself out.

Be forwarned:  People with integrity will want to take a shower every few pages.

[/quote]

I think the book was essentially right about Skilling wrong about Lay, and wrong about a number of other folks it tarred (I happen to know a couple). <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The sad truth is don't expect fairness and honesty when the mob and the press (often the same group) moves in after the battle  to shoot the survivors. At that point they know they’ll sell more books by painting the picture as the potential book buyer wants it.

[/quote]

I can't claim to know any of the players, but I will speak to the validity of the book.  It isn't billed as a work of fiction, so it has to be essentially true or run the risk of an huge libel lawsuit. [/quote]

Just because a journalist wasn't suied dosen't mean their book was 100% accurate.

 [quote=Starka]While I'm sure that there are various levels of guilt, I can't agree that there are any innocents at the upper levels. [/quote]

Not everyone at "upper levels" is involved in firm-wide accounting details.

[quote=Starka]  Further, I don't think these accounting schemes were developed after the fact in order to save the company...these schemes were the source of Enron's troubles as well.

[/quote]

That I would agree with. OTOH, they schemes were blessed by the audit experts. Again, not everyone there was scum or dishonest, and don't expect objectivity from booksellers when the public is out for blood.

Mike, I never said that the book was 100% correct…just essentially true.  My point, however, is that I can hardly view Ken Lay as a babe in the woods.

[quote=Starka]Mike, I never said that the book was 100% correct...just essentially true.  My point, however, is that I can hardly view Ken Lay as a babe in the woods.[/quote]

There's a pretty wide divide between a "babe in the wood" and evil incarnate. Lay was called back to try to right the ship, his auditor gave the scheme (which began before he returned) their blessing. If you look at his own conduct with his Enron stock, he didn't dump it all and cash out. His is a different story than Skilling.

If I stole 5000 bucks from 1 person, I may get probation. If I stole 5000 bucks from 10 people I may go to jail for 6 months. This guy assisted with stealing 10,000 bucks from millions. He is a crook.

[quote=AirForce]If I stole 5000 bucks from 1 person, I may get probation. If I stole 5000 bucks from 10 people I may go to jail for 6 months. This guy assisted with stealing 10,000 bucks from millions. He is a crook.[/quote]

Stealing?  Was there embezzlement?  Who stole what?