Conspiracy of Fools: A True Story
by Kurt Eichenwald
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Book Summary Information
Author: Kurt EichenwaldEdition: Paperback
Audio: English (Unknown); English (Original Language); English (Published)
Published: 2005-12-27
ISBN: 0767911792
Number of pages: 784
Publisher: Broadway
Book Reviews of Conspiracy of Fools: A True Story
Book Review: Tells the Enron story halfway
Summary: 5 Stars
I really enjoyed "Conspiracy of Fools," although it feels as if it only told half of the story about Enron's collapse, ending before the plea deals and convictions of the company's top executives. The book traces the history of the company and its chairman, Ken Lay, describing his early innovations in launching a market for natural gas during a time when the industry was being deregulated. It then describes the rise of company president, Jeff Skilling, a former consultant at McKinsey & Co. and graduate of Harvard Business School, and his role in advancing the career of Andrew Fastow, Enron's CFO. While the book is sympathetic to Lay (portraying him as an unwitting victim of the company's collapse) and less so to Skilling (portraying him as a tortured alcoholic who urged underlyings to cook the company's books to gin up earnings), it portrays Fastow for the crook that he was. Not only was Fastow completely incompetent as a corporate CFO, but he also schemed and schemed and schemed for his personal enrichment, and surrounded his greedy self with other willing participants in his financial machinations (including Michael Kopper and his boyfriend, wife Lea Fastow, treasurer Ben Glisan Jr., chief accounting officer Richard Causey, chief risk officer Richard Buy, executive vice president J. Clifford Baxter, executive Kenneth Rice, and lawyer Kristina Mordaunt). The head of Enron's international group, Rebecca Mark, is portrayed as an incompetent spendthrift. Meanwhile, Arthur Andersen was populated with dunderheads, including David Duncan, who kowtowed to Enron's every wish, and lawyer Nancy Temple, who ordered the mass shredding of Enron-related documents. Merrill Lynch fired its oil analyst, John Olson, because Enron didn't like his stock opinions and wanted Enron's banking business, according to the book. Enron's law firm of Vinson & Elkins appears particularly incompetent and all too willing to assist Enron in cooking its books. Three money-grubbing bankers from Greenwich NatWest, Giles Darby, David Bermingham, and Gary Mulgrew, also participated in a plan to steal money from their company while helping Fastow, according to the book (the three were later extradited to the United States to face a criminal trial).
One of the book's shortcomings is its descriptions of links between Enron executives and members of the Bush administration, as if to suggest that Republicans are somehow implicated in Enron's internal problems. Ultimately, there are no bombshells to report. If anything, the moral vacuousness of Enron's executives has more in common with President Clinton's mendacity and the vapidity of the dot-com and telecom stock bubbles, an age when fantasy completely trumped reality. The Bush administration and U.S. taxpayers were left to clean up the mess.
Eichenwald's book climaxes with the bankruptcy filing of Enron, but the criminal trials of key executives had yet to occur (and Lay died of a heart attack in 2006). Thus, the book feels somewhat anticlimactic.
Another book, "Enron: The Smartest Guys in the Room," is much more critical of Skilling and Lay's managerial shortcomings, whereas "Conspiracy of Fools" is most critical of Fastow and his use of off-balance-sheet special-purpose entities to move debt from Enron's balance sheet and to enrich himself and his coterie of spineless miscreants.
Summary of Conspiracy of Fools: A True Story
From an award-winning New York Times reporter comes the full, mind-boggling story of the lies, crimes, and ineptitude behind the spectacular scandal that imperiled a presidency, destroyed a marketplace, and changed Washington and Wall Street forever . . .Enron was a $100-billion-a-year company in October 2001--America's seventh-largest. The Houston-based energy firm enjoyed warm ties with newly installed President George W. Bush. Earnings were up 26 percent from the previous quarter, while Fortune magazine had named Enron the country's most innovative company six years in a row. Less than two months later, Enron filed for bankruptcy in the biggest corporate failure in history. Enron became synonymous with the greed and fraud of the go-go high-tech stock bubble of the late 1990s--the worst of a series of spectacular corporate collapses that also took down WorldCom, Tyco, and Global Crossing.
What went wrong? Veteran New York Times financial journalist Kurt Eichenwald does an epic job of telling Enron's story in his 742-page tome Conspiracy of Fools. Eichenwald, a finalist for the Pulitzer Prize in 2000, also authored The Informant, an acclaimed account of a vast international price-fixing scandal at Archer Daniels Midland. Conspiracy of Fools tells the Enron tale with a cinematic narrative style, relying almost exclusively on scene and dialogue to bring his account to vivid life. We see how federal regulators opened the doors for the Enron fraud early on when they let the company loosen up its accounting rules and essentially cook its books. We read how Enron bullied Wall Street firms into issuing favorable reports about its share price by threatening to take away lucrative banking fees. Eichenwald also reveals how Enron manipulated electricity prices during the California energy crisis of 2000. Eichenwald's book is less successful in situating the Enron debacle in its wider context--the cycle of market speculation that reached a historic summit in the dot-com bubble. Was Enron just a cautionary sign of the greed and lack of ethics of a few bad apples, or was it more symptomatic of an entire market system? That may be a debate for another book. --Alex Roslin
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