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, http://www.bookpleasures.com and the travel site, 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.

---

Empowering Teenagers - A Few Clues About Teens And A New Book

EMPOWERING TEENAGERSFrom a new book: "Adolescence is a difficult period,... Read More

Practice What You Preach - AchieveMax® Top Ten Book Review

Practice What You Preach: What Managers Must Do to Create... Read More

Life Lines

Joyce Meyers has been inspiring Christians for decades with the... Read More

Going Deeper - Book Review

Going Deeper by Jean-Claude Koven is certainly a nicely presented,... Read More

Rat Race Blues E-book Review

RAT RACE BLUES: How To Break The Stranglehold Darlene Arechederra... Read More

How Would You Move Mount Fuji? - AchieveMax® Top Ten Book Review

For a number of reasons, today's hiring managers from Wall... Read More

Undercurrent Blues Has A Rhythm of Its Own - Poetry Book Review

On July 17, 2005 Cahuenga Press released Undercurrent Blues by... Read More

What $ells on EBay For What - Book Review

You look at the salesletter and the price tag ($8.95... Read More

The Storyteller, Volume I - A Must Read Book

The Storyteller New Book Offers Supernatural Tales Involving Everyday PeopleMartha... Read More

E-books in Your Life

E-Books are making a big impact in the way we... Read More

Introducing a New Web Site

You're Fired is a book that tackles the real stories... Read More

The Bubblegum Babes Guide to Sixth Grade - Review

This is one book that I would have cherished as... Read More

What Really Works - AchieveMax® Top Ten Book Review

If you watch television, read the newspaper and/or magazines, frequent... Read More

Headlong Into Quicksand: The Tale of Today in America

America´s 220 years of Democracy (of its 400 years) is... Read More

Give a Little - Book Review

This 310 page saga is Scott Underhill's second superbly written... Read More

The Wal-Mart Decade - AchieveMax® Top Ten Book Review

The Wal-Mart Decade: How a New Generation of Leaders Turned... Read More

Metaphorically Selling

The Big IdeaA lot of people consider selling a very... Read More

Book Review: What Color Is Your Parachute?

What Color is Your Parachute? Reviewed by: Matt Keegan ©... Read More

FISH! Tales - AchieveMax® Top Ten Book Review

FISH! Tales: Real-Life Stories to Help You Transform Your Workplace... Read More

The Legend of Juggin Joe - A Preview of the Comedy Sensation You Dont Want to Miss!

THE FROGGIN INCIDENTAs I recall this particular happenin', which we... Read More

Profitable Growth Is Everyones Business - A Book Summary

The days of ruthless downsizing and drastic cost cutting are... Read More

The Hushed Willow - A review by Amanda Evans

The Hushed Willow by Lorna Joy Knox nee Ramsamugh is... Read More

The World is Flat - This Book by Thomas L Friedman has Taken the Online Entrepreneurs by Storm

The New York Times' columnist visits India often. I read... Read More

Marone Memoirs: An Immigrant Story - Review By Amanda Evans

Marone Memoirs ? An immigrant Story by author Sarah E.... Read More

Book Review: Seth Godin - All Marketers Are Liars

Let me start with a small disclaimer: I am a... Read More