Lessons from Enron — 17 Comments

  1. Thank you Rachel.
    I too had to chase down the “cate meredith or cara ellison” issue. It’s 2020, and I know people whose lives were ruined by enron. When cate cheers the enron folks on, I have to agree with the parallel universe analysis.
    For example: “Cara Ellison on May 26, 2009 at 10:14 pm said: That doesn’t make sense. No, it’s an abysmal record because the cases fall apart. The DOJ has gotten a whopping 2 jury convictions out of 33 indictments. Not a stellar record. There was no fraud or conspiracy at Enron.”
    Good grief.
    I don’t even care if the indictees had a stellar record of 0% conviction.
    What they did was wrong. I’m amazed he is back out of jail now.

  2. Let’s put an end to the ‘Cara Ellison’ fable. Cara Ellison is the pen name of Catherine Meredith, director of a PR firm Bene Media, and hired by former Enron executives. I don’t think you need much more proof from these dopes that they’re about as slick and dishonest as you can get. Not only were they masters of financial smoke and mirrors, but to ‘redeem’ themselves, they hire a PR hack to blog about their virtues under an assumed name!! Heck, they even used Enron’s old corporate HQ address (1400 Smith Street, Suite 5050) to register the blog. You really can’t teach an old dog new tricks.

  3. Watched Enron: the Smartest .. Room yesterday.

    It’s actually Cara Ellison that I wanted to comment on. I was recently looking for background information on another Wall Street firm, the management consultancy McKinsey, recently in the news for the insider trading conviction of ex-MD, Rajat Gupta. A search engine hit led me to Ellison’s Enron blog.

    Reading her blog entry “The McKinsey Consultant” is like stepping into a parallel universe where reality has changed. She namechecks a few too many times the exchanged glances and “looks” between her and the (handsome) consultant, as if that means anything in business. She applauds his ability to be persuasive comparing him to the greatness of Lay or Skilling (only later did I discover that Lay and Skilling were incredibly persuasive at selling people fraudulent ideas). She writes how she is willing to take the fight to the management consultant when erroneously asked to clock in at the beginning of her shift – it later transpires that she is perfectly happy for others to be forced to clock in, just as long as it’s not her.

    What leaves a strange taste in the mouth is that in her alternate universe, all these things are perfectly normal. What to us would be a dystopia, is for her, perfectly OK. Distrusting a consultant but then not being able to get over his good looks. An attitude that she defends her own turf to the hilt, but her colleagues can get screwed by new company regs – it doesn’t matter as much. Completely overlooking the fact that even if Lay and Skilling were brilliant, the outcome they caused in Enron cannot in any way leave them as persons to be admired and defended.

    So surprise, surprise, here she is, defending Lay and not accepting that Skilling is a convicted felon (it was an incompetent DoJ that put him in prison apparently).

    There exists a vicious breed of sociopath in corporate America, that wears ordinary clothes, goes about their everyday business – and yet is steadily destroying the country and enriching themselves – and doing it much more efficiently than America’s enemies (terrorist or otherwise) could ever have dreamed of doing.

  4. Cara Ellison refuses to post my comments. In fact, she controls and highlights what is displayed on her precious little blog. Below is my recent attempt to post which has been filtered. She is a coward and an intellectual midget.

    I will be surprised if this actually gets posted, but I might as well give it a shot. In fact, I would like to have it posted so those that know more about Enron can enlighten me as to my erroneous thought process. I have watched “The Smartest Guys in the Room” a few times. I did not work at Enron so I certainly don’t have inside knowledge. But quite honestly, it blows my mind that there is a website devoted to promoting Enron and defending some of those found guilty of white collar crimes. The founder of this blog is clearly a capable person and I am not writing this to insult her, but I am afraid she and many other Enron supporters are misdirected or lacking bigger picture intelligence. And perhaps that is why the documentary was not entitled “The Most Intelligent Guys in the Room”. Smart people are good at facts and figures and thinking quickly on the draw, but they fall short of comprehending the big picture. I am certainly not smart, but I do think I possess a fair degree of intelligence or at least enough intelligence to conclude that Enron leadership and participating parties in the scam like investment banks, auditors, the media, and the government, displayed a less than positive example of what the human being can achieve.
    Ayn Rand wrote some great works and I think some of you Enron supporters align yourselves with her philosophy, but she is amiss on some large and significant points. Although I agree with many facets of her philosophy, it is the focus on pure individualism where I take exception. Man, in and by himself, is not nearly as powerful or potent as men working towards great progress and evolution into something greater. This is not to say that a man in and by himself can’t create incredible works of art or value in and by himself. A man like Beethoven comes to mind in this example. But, Beethoven’s music searches for something greater. His ninth Symphony inspires not only individuals to reach for more, but for a culture to reach for more. I am talking about Greece, Rome, and the Italian Renaissance. Perhaps I am also talking about advances in knowledge – science, astronomy, geology, medicine, architecture, aeronautics etc…. These types of achievements are what mark greatness and positive human evolution. These types of achievements require not merely individual genius, but also cooperation, vision, and motivation inspiring a culture and the population to get behind the idea. Enron and the Enron leadership can’t even be mentioned in the same sentence with this concept.
    Enron leadership, specifically Lay and Skilling, reveal a lower use of human smartness and a suppression of intelligence and greater vision. In fact, economics and wealth creation, are in my opinion, merely a base upon which greatness can be built. Lay and Skilling may have been smart individuals and able to motivate the masses to enact their “vision”, but there was nothing great in the endeavor and certainly the final results ended in failure, regardless of whether a crime was committed or not. Enron was a failure, and thus the leadership failed. There is no other way to spin this without making excuses. The company went bankrupt and every person involved with company lost their job. Enron is extinct.
    My key point is that economics, profit and loss, and individual wealth creation in and of itself is nothing of importance when considering great human beings or culture. Indeed, a healthy and strong economy and wealth creation has been a key ingredient in every past great culture and civilization, but the economy and individual wealth is not the fruits of those great cultures, it was the art, architecture, music, literature, and advances in knowledge. What fruit did lay or Skilling provide. What fruit has grown from their type of mentality that has spread like a virus throughout the American culture? These guys are leaders or visionaries, they are, in fact, smart well educated and politically connect traitors. They used their education and position to make millions for themselves and their pals while creating absolutely nothing of value. In fact, I would go so far as to say they took resources away from potentially more promising avenues to pursue their individual gain. Lay and Skilling remind me of Jabba the Hut.
    Man and Woman, the human being, is capable of reaching great heights and there are many example from the past and present to illustrate our potential. But as long as we focus on economics, the “American Dream”, and individualism without a greater vision, we will fall way short of our potential greatness. Lay and Skilling could have been put to much better use, but they chose another direction. Look at it through the eyes of a child. A child sees the whole world before them with limitless opportunities. Would you teach these children about Lay and Skilling and their achievements, or would you put on some Beethoven and tell them to listen carefully and imagine what could be?

  5. I hope you’re right, Elsie, that our apathy will eventually turn to sustained outrage that will lead to change. We’ve seen some outrage over the bonuses paid at AIG but that was short-lived, singled out individuals rather than critiquing the system. But, as you said, there are signs of hope – from an increased savings rate to more clothes swaps.

  6. Are we so determined to become the few that we overlook reality? Are we so blinded by the money we’ll never make but think we could that we can’t see that there has to be a better way?

    Tragically, I think the answer is yes. There was a study not long ago–wish I could remember who was responsible for it–that purportedly showed that people who support eliminating the estate tax do so because they assume it will someday apply to them even though, statistically, most people are unlikely to amass that much wealth. We live in a land where people have bought two major lies. One is that the rich deserve to be rich and the poor deserve to be poor, and the other is that any poor person who works hard enough can get rich. Therefore, many people see it as both morally wrong to impede anyone’s accumulation of personal wealth and disadvantageous to themselves because they believe they have a much greater chance of becoming wealthy than they actually do.

    I think a sea change is coming, but slowly. Because people tend to be self-seeking, it starts with repeated in-your-face reminders that they don’t have a chance in hell of becoming the next Donald Trump. It’s supported by continuous references to the atrocities committed by men like Ken Lay. People are apathetic, but after awhile, apathy turns to outrage, and that’s when something gets done.

  7. It makes just about as much sense as your accusation that I am lying, which you dropped to quietly when your own quote showed that I wasn’t…

    People can review the DVD, your blog (I presume to get the opposing view), the legal case, or whatever other resources they want to and then decide whether there was fraud or conspiracy or both at Enron. It is very difficult to get a fraud conviction, so the DOJ record doesn’t surprise me. What the DVD showed was that what went on at Enron was morally highly questionable.

    Since you obviously have an axe to grind and your comments have nothing to do with the point I was trying to make in my post, I am going to disengage from this discussion.

  8. That doesn’t make sense. No, it’s an abysmal record because the cases fall apart. The DOJ has gotten a whopping 2 jury convictions out of 33 indictments. Not a stellar record.

    There was no fraud or conspiracy at Enron.

  9. Yes, he was found guilty. There were factual and legal issues with those shameful convictions, however, and that is why he is taking his case to the Supreme Court.

    But since you brought up the legal system, the DOJ has an abysmal record in the Enron cases. Absolutely appalling, in fact. Care to hazard any guess as to why?

  10. It seems like whether he lost money or not has no bearing on his guilt.
    It’s certainly possible to act unethically and still be buying your own snake oil.

  11. And regarding your claim, Cara, that the company was facing a “liquidity crisis,” the jury found Jeff Skilling guilty. A conviction, which was upheld by the United States Court of Appeals for the Fifth Circuit. But I am sure that was due to “activist judges” or people “lying” the way I did…

  12. Cara: Thank you for the quote. It clearly shows that he said that his net worth shrunk from 100 million to less than $20 million, which is exactly what I wrote. I did not refer to liquidity – liquidity and net worth are two different things. He can very well have $20 million with $19 mill tied up in a house or something. Furthermore, even $1 million is more than many people make in a lifetime, so my point still stands.

    So, your quote proves that I was not lying about what he said. In fact, you confirmed it. I will make my write up clearer that this is contained in the bonus material (although I believe it’s also in the many part). But that fact is irrelevant because you were claiming that Lay never said this. He did. Your quote confirms that.

    I am not using this statement to say anything about Lay’s guilt or lack thereof. In fact, my whole post does not deal with his guilt or not. My post deals with our complacency to folks like Lay who are enriching themselves using methods that are at least ethically questionable and possibly also legally questionable.

  13. You wrote:

    The documentary contains a clip of Ken Lay talking to reporters bemoaning the fact that his net worth shrank from $100 million to a mere $20 million after the Enron collapse.

    You didn’t say it was in the bonus section. And you’re badly lying about what he said. I am watching it now and he says, “Linda and I and our family saw our net worth reduced from a hundred million to … less than $20 million … we have less than one million in liquidity.

    You did not mention the fact that he was really saying he had less than a million and you misrepresent the point of his comments: he too lost money. If he were guilty, don’t you think he would have been smart enough to pull his money out of the company?

    He was trying to say that EVERYONE lost money. He was not, as you state, “bemoaning the fact that his his net worth shrank from $100 million to a mere $20 million after the Enron collapse.”

    Also, the NYT added the $400 million figure (who knows where). Plus it’s funny you mention the NYT since they were part of the problem, fanning irrational anger toward a company that experienced a liquidity crisis – not corruption.

  14. Cara: Before accusing me of lying, which is quite a serious accusation, you might want to re-watch the DVD’s extras. It’s in there. He said this during a press conference at a Double Tree Hotel. Oh, and look at this, it was even reported at USA Today:

    Lay, once worth $400 million, told The New York Times that he lost most of his riches in the Enron meltdown. His net worth now: $20 million.

    I suppose expecting an apology from you would be asking for too much…

    And why does it matter to you anyways? I guess this says it all: “Cara Ellison knows what’s what. She suffers no fools – at all. She loves a good re-direct. She’s Conservative, a bit of an Objectivist, and a total Capitalist. For good measure, she will say it again: there was no fraud or conspiracy at Enron.”

  15. I love the yiddish joke!

    I’m currently reading “Predictably Irrational” by Dan Ariely, behavioral economics, basically an awful lot like social psychology but around money and markets and all. It provides a lot of well-researched insight into how things actually work as opposed to the whole free-market rational self-interest myth.

  16. Hi,

    You’re lying about Ken Lay. There is no such clip anywhere in that movie and Ken Lay never said anything like that. It’s possible you misunderstood something but Ken Lay never “complained” that his net worth went from $100 million to $20 million.

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