Digging Deeper into the Muck: Dirty Details of Enron Fiasco

Conspiracy of Fools: A True Story, by Kurt Eichenwald. Broadway Books, 742 pages, $26.

The spectacular disintegration of Enron in 2001 left many shattered lives in its wake, both low-level workers whose pensions became worthless, and-at the other end of the culpability spectrum-executives, bankers and accountants who are now awaiting trial, sentencing or release. In between is a vast gray area filled with employees, advisors, regulators and politicians who have spent many of the intervening years providing depositions, justifying their choices and trying to reclaim their reputations.

One of the silent victims of Enron has been the book-publishing industry. Each year after 2001 brought forth a new batch of books on the subject, and these tomes all had one thing in common: They didn’t sell well. The injury to the publishers, however, was largely self-inflicted. Most of the books were just plain bad or at least misguided. Many of the authors suffered from a disorder not dissimilar to that which animated the Enron scandal in the first place-a delusional sense both of their own importance and their ability to produce superior results simply by virtue of who they were. This is certainly true of Power Failure by Mimi Swartz and Sherron Watkins, a marginal player in the overall story who won 15 minutes of fame after Congressional staffers turned her into a highly unlikely Joan of Arc. The same goes for 24 Days by two Wall Street Journal staffers who seemed to believe that the details of their intrepid reporting in the days leading up to the bankruptcy was the most thrilling aspect of the whole episode.

Yet even the best of the books produced during this period have failed to generate any excitement among bookstore customers. The Smartest Guys in the Room (2003), by Fortune reporters Bethany McLean and Peter Elkind, is still the definitive book on the subject. Ms. McLean and Mr. Elkind effectively detail the culture, characters and context that created Enron. The book’s failure to capture the public imagination could reflect our apparent preference for morality tales with a single villain who’s vanquished at the last moment so that we can all go back to what we were doing before. In The Smartest Guys, however, everyone and every institution is guilty of something, and there’s enough ethical and legal ambiguity to ensure that no one has to take any responsibility.

Just when it looked like the publishing industry had finally given up on the subject, here comes New York Times reporter Kurt Eichenwald with Conspiracy of Fools. Weighing in at 742 pages, it’s almost as big as any two of the previous major contributions to this genre put together. Mr. Eichenwald appears to have talked to everyone more extensively and scoured the documents more exhaustively than anyone else. The book is organized chronologically in a sequence of short but powerfully vivid scenes, complete with dramatic dialogue and detailed descriptions covering everything from what people were wearing or eating to the décor. And the book even has a clear villain: Enron’s chief financial officer, Andy Fastow, whose crimes-engineered for personal financial gain-ultimately caused the company’s collapse. The result is that Conspiracy of Fools, despite its length, is an irresistible read and will no doubt one day make a highly entertaining film.

Yet there are aspects of Conspiracy of Fools that make one pause before declaring it an unqualified success. Some of it feels almost too good to be true. Although the extensive notes and sources look solid, there are moments when the quotes and descriptions of what a character is thinking at a given moment seem, well, a little too pat, even puzzling. For instance, why would Dick Cheney describe himself as from Texas when he’s famously from Wyoming?

The entire subtext relating to Enron’s broader political and business connections never has the payoff that the internal corporate intrigue does. A number of brief vignettes involving everyone fromRupertMurdochtoArnold Schwarzenegger come across as gratuitous name-dropping. There are multiple scenes at fund-raisers and Washington parties at which small talk is exchanged, but it never seems to go anywhere. Mr. Eichenwald makes much of the fact that President George W. Bush unsurprisingly tried to distance himself from Enron chairman and C.E.O. Ken Lay after the scandal broke, but he never convincingly makes the case that the two were particularly close. Mr. Lay was clearly on intimate terms with Bush père, but Mr. Eichenwald is reduced to citing Ann Richards’ comments on Larry King Live as evidence that he was close to the son as well.

Finally, for all of the new texture provided, when I finished Conspiracy of Fools, I didn’t feel as though I’d gained any fundamentally new perspective on the Enron fiasco-nothing I couldn’t have gathered almost two years ago from The Smartest Guys. Some of the detail in the new book, particularly with respect to Jeff Skilling-who’s remained something of an enigma until now-is genuinely riveting. But I don’t know that it adds much to our understanding of the big picture.

By casting Mr. Fastow as the unambiguous old-fashioned scoundrel at the center of the disaster, Conspiracy of Fools may unintentionally give readers a false sense of security about the likelihood of so spectacular a meltdown ever occurring again. I’m not suggesting, by the way, that Mr. Eichenwald whitewashes the behavior of Messrs. Skilling and Lay, or indeed of others. But the extraordinary access to them enjoyed by the author allowed him to paint a more nuanced picture of their behavior and motivation. As the stock market and merger activity begin to approach pre-meltdown levels, we can take some comfort in the structural protections that have been put in place since Enron. But it would be a mistake to presume that these are enough to combat the underlying hubris, greed and ambition that still lurk in the financial, corporate and governmental sectors. Continued vigilance is needed to ensure that this combustible mixture doesn’t explode again and precipitate the next market meltdown.

In the meantime, enjoy the book-the movie will be coming soon to a theater near you.

Jonathan A. Knee is a senior managing director at Evercore Partners and director of the media program at Columbia Business School.