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)
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.
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Veteran journalist Cokie Roberts, who joined an upstart NPR in 1978 and left an indelible imprint on the growing network with her coverage of Washington politics before later going to ABC News, has died. She was 75.
Roberts died Tuesday because of complications from breast cancer, according to a family statement.
A bestselling author and Emmy Award winner, Roberts was one of NPR's most recognizable voices and is considered one of a handful of pioneering female journalists — along with Nina Totenberg, Linda Wertheimer and Susan Stamberg — who helped shape the public broadcaster's sound and culture at a time when few women held prominent roles in journalism.
Indie press Galley Beggar has warned of the impact a no-deal Brexit could have on publishing after learning of "crazy" government requirements on distribution and warned it could put smaller publishers out of business.
The Norwich-based independent, which recently scored a Booker Prize nomination with Lucy Ellmann's Ducks, Newburyport, fears smaller publishers could be put out of business over legal uncertainty around Brexit.
Galley Beggar founder Sam Jordison outlined concerns around UK government and Publishers' Association guidance, and in particular government guidance suggesting that publishers will need to state country of origin or International Organization of Standardization (ISO) codes for their inventory. The government published its Yellowhammer contingency plan which details "worst case" scenarios for a no-deal Brexit last week. The document warned of channel crossing delays and disrupted trade across the Irish border...
... "We're terrified, we are genuinely terrified. There's all kinds of other reasons to object to Brexit but from a practical point of view it's going to completely screw us. The main concern is that this is potentially going to put people out of business. Not even potentially, it is going to put people out of business. Our margins are small so rising costs are already a nightmare – that's only going to get worse. Paper, transport are going to go up – even with a deal that stuff is problematic." ...
Elena Ferrante, the Italian author whose Neapolitan novels became a global phenomenon, is to publish a new book in Italy on 7 November – her first novel in four years.
Bestselling author Jojo Moyes has called on the government and the publishing industry to do more about the UK's "shameful" adult literacy record. In 2018, Moyes, writer of global hits including Me Before You and The Girl You Left Behind, donated three years of funding to charity the Reading Agency for its Quick Reads scheme, saving it from closure when its previous sponsorship ran out.
While she was "proud to be able to help out as a private individual", she is furious at what she calls governmental and industry failure to understand the importance of Quick Reads.
Dorothea Benton Frank, author of 20 novels set in the Charleston area and a beloved figure who for years split her time between Sullivan's Island and the New York City area, died Monday evening after a brief illness. She was 67.
Amazon has broken the worldwide embargo on Margaret Atwood's The Testaments (Nan A. Talese), which isn't supposed to go on sale until next Tuesday, September 10, inadvertently shipping about 800 copies to customers. This has infuriated indies, led to early reviews of the book around the world--revealing basic elements, and caused exclusive excerpts to be published earlier than planned. Altogether, the embargo violation stained the release of one of the biggest books of the fall season, Atwood's long-awaited sequel to The Handmaid's Tale.
In response to the situation, publisher Penguin Random House issued this statement: "A very small number of copies of Margaret Atwood's The Testaments were distributed early due to a retailer error which has now been rectified.... Not naming Amazon and attributing the problem to "a retailer error" irritated many indie booksellers for a number of reasons: some pointed out that if their stores had sold copies of the book early, it would be considered an embargo violation and likely lead to punishments, such as not receiving embargoed books ahead of publication date in the future. Many speculated PRH will not do anything of the sort with Amazon.
In a series of tweets, Raven Book Store, Lawrence, Kan., succinctly outlined the problem:
"It should come as no surprise that a certain huge online retailer is selling this book very close to our cost; if we sold it at their price we'd make $1.73 per copy. We've discussed before how this is unfair, and how we deal with it.
But now, not only is the huge online retailer selling it for a price we can't compete with, but they shipped out copies a week early. This increases the likelihood that someone who got it early uploads a bootleg copy online, cutting into sales for everyone.
It also gave de facto permission to places like the New York Times and NPR to publish spoiler-heavy reviews, which deflates the mysterious buzz about what's in the book. It's likely that less mystery means less vital first-week sales for everyone. I hope we're wrong."
Chanel Miller was known by the pseudonym Emily Doe at the trial of Stanford student Brock Turner, who was sentenced to six months in county jail for the assault. The sentence caused widespread anger given that Turner could have been jailed for up to 14 years for the crime. Many believed Turner had been given a lenient sentence because he was a white athlete from a prominent university, Stanford. Turner repeatedly claimed alcohol was to blame and that the encounter was consensual, while his father called the attack "20 minutes of action".
Miller is now releasing a memoir, Know My Name, which her publisher says will "change the way we think about sexual assault forever". Miller's 7,000-word statement at the trial garnered millions of views around the world when it was published online in 2016. She will also appear on CBS's 60 Minutes later this month and extracts from the interview, including Miller reading the statement, have been released this week.
Hundreds of readers in the US have received early copies of Margaret Atwood's heavily embargoed follow-up to The Handmaid's Tale, The Testaments, after copies were shipped out early by Amazon.
Security around the novel had been as tight as anything mounted for JK Rowling or Dan Brown's blockbuster releases – the judges for the Booker prize, who shortlisted The Testaments for the award on Wednesday, were warned they would be held liable if their watermarked copies leaked. But since Tuesday, readers have been posting images on Twitter of their freshly delivered copies, a week before the novel's official release on 10 September.
And The Guardian have just published an (officially approved) excerpt--see link below:
The shortlist for The Booker Prize, the U.K.'s top prize for fiction, has been announced. The list includes two former winners, Margaret Atwood and Salman Rushdie--even though Atwood's book doesn't publish until next week:
Margaret Atwood (Canada), The Testaments (Vintage, Chatto & Windus)
Lucy Ellmann (U.S./U.K.), Ducks, Newburyport (Galley Beggar Press)
Bernardine Evaristo (U.K.), Girl, Woman, Other (Hamish Hamilton)
Chigozie Obioma (Nigeria) An Orchestra of Minorities (Little Brown)
Salman Rushdie (U.K./India) Quichotte (Jonathan Cape)
Elif Shafak (U.K./Turkey) 10 Minutes 38 Seconds in This Strange World (Viking)
Reese Witherspoon has named Lara Prescott's debut novel The Secrets We Kept as her September book club choice. This thrilling historical fiction, which publishes on September 3, is inspired by the true story of the CIA plot to infiltrate the hearts and minds of Soviet Russia with the greatest love story of the twentieth century: Doctor Zhivago. The Secrets We Kept is also a great hit with the 20 BookBrowse members who reviewed it for our First Impressions program--rating it a stellar 4.7 stars!