You know things are really, really bad when grown men and women with advanced degrees and six-figure salaries start making excuses which, in the normal course of things, you wouldn’t accept from a five year old.
That’s Enron today, in spades.
(Mom: Who ate the cookies?! Johnny: Umm, Mom, I’ve gotta say I was out of the loop on the decision-making on that one.)
The clearest explanation I’ve yet heard of what Enron was doing is found in this paragraph from today’s Times, quoting the so-called ‘Powers Report’ …
If the Raptor accounting was correct, the committee concluded, then “a company with access to its outstanding stock could place itself on an ascending spiral: an increasing stock price would enable it to keep losses on its investments from public view; which, in turn, would spur further increases in its stock price; which, in turn, would increase its capacity to keep losses from its investments from public view.”
And who’s to blame?
Ken Lay’s wife says her husband, the founder, longtime CEO and Chairman of the Board of Enron was just ‘out of the loop‘ when it came to the accounting shenanigans that swindled millions of Americans out of billions of dollars.
Jeff Skilling, Lay’s longtime number two who briefly served as CEO in 2001, told the Enron Board’s investigating committee that he too didn’t have much sense of what was going on.
The upshot of the Board’s investigating committee report is that the members of the board just didn’t keep a close enough eye on all the inappropriate and/or criminal acts the company’s executives were committing, i.e., they didn’t know what was going on either!
If these bozos still don’t know what was going on they should definitely pick up the Monday New York Times, which provides a nice timeline of the hidden events which led to Enron’s collapse.
The aforementioned ‘raptors’, the paper vehicles used to hide Enron’s losses, began to buckle and strain a bit more than a year ago. They had to be reorganized first at the end of 2000 and then again in March 2001. This provided Enron executives and insiders the window of time necessary to cash out their stocks. Things apparently began to hemorrhage again about three months later. But this time the problem couldn’t be papered over and the fireworks began.
As I mentioned today on MSNBC, what is now coming into focus is that the work of the Cheney Energy Task Force, the California energy crisis, and Enron’s desperate efforts to save itself were all happening at roughly the same time — with many of the most important developments taking place in the late Spring. As Henry Waxman no doubt realizes, this makes the Energy Task Force records more important than anyone could have imagined six months ago.
And speaking of things that were taking place at the same time, I continue to be interested in the sequence of events taking place at Enron at the end of last summer, many of which at the time must have appeared unconnected, but now merge into a larger whole.
Consider a few …
August 8th: On August 8th Enron board member Frank Savage leaves Alliance Capital to form Savage Partners, LLC. Backstory: Alliance Capital, the largest institutional holder of Enron stock, instructed the Florida state pension fund, among others, to buy Enron stock after the end of October. Savage was the Chairman of Alliance Capital International, a division of the firm handling investments in the Middle East and Africa, until leaving Alliance on August 8th.
August 14th: Jeff Skilling unexpectedly resigns as Enron CEO after only a few months.
August 21st (on or about): Sherron S. Watkins sends whistlblower letter, anonymously, to newly-returned CEO Ken Lay.
September 4th: Senator Phil Gramm, husband of Enron board member Wendy Gramm, announces his retirement from the Senate. Gramm’s name was on the list of potential Senate retirees; but his announcement came as a surprise.
I mean, hell, I can wait on the Cheney Energy Task Force notes. But the minutes and papers of the members of the Enron board during July and August are what you just really want to see.