The Roots of Enron

There’s a lot to think about these days, in both a major and a minor key, depending on what you

There’s a lot to think about these days, in both a major and a minor key, depending on what you think is important in life. The froufrou-everybody needs a bit of froufrou in their life!-includes small businesses like the closing of Talk or whether Henry Kissinger will be kicked out of the Brook Club, as he should be, for bringing in a Financial Times reporter with a concealed microphone.

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Then there’s the rapturous acclaim for Robert Altman’s Godawful Park , a cinematic hash of ineptitude and solecism so heavy-footed and non -sensical (sic) that I fear for the sanity, not to mention the standing, of those critics who have pronounced it good, let alone a masterpiece. Although I suppose if you have a taste for allegory, and note what little substance there is in the picture is in the country-house décor, you can read Godawful Park as a film à clef about Condé Nast and think of the Bob Balaban character as Si Newhouse (the physical likeness is pretty startling), and Maggie Smith, Helen Mirren, Jeremy Northam, etc., as all these ghastly English people he’s imported to edit his magazines.

And always there is Enron, Enron, Enron!

My mind keeps going back maybe 30 years, to a cocktail party in the swank Houston quarter of River Oaks and a conversation I had with the late David Searls, managing name partner of the great Houston law firm then known as Vinson, Elkins, Weems & Searls.

For whatever reason, I found myself asking “Judge” Searls (as he was called by his friends), “David, which is the biggest legal shop in this town: you guys or Baker, Botts?”

David had one of those snapping-turtle mouths you often see in power Texans, a snicker-snee of a mouth with a cruel overbite that looked like it could take the head off a rattlesnake in a second’s quick chomp. It was a physical trait he shared with Lyndon Baines Johnson. At my question, the fierce lips twisted into a clever sneer. “Hell,” he exclaimed, “Baker, Botts is the biggest law firm-but we’re the biggest investment-banking house!”

An answer which left him pleased as punch, and which, as far as I was concerned, made perfect sense. Back then, as we in the finance business knew, you could never get anyone at the top of Vinson, Elkins to give you a legal opinion; the partners were all off promoting or doing deals, their own and their clients’.

Now a law firm that thinks in investment-banking terms is going to be more concerned with “Yea!” than “Nay!”, more with facilitation than rectitude, more with what can be gotten away with than what shouldn’t be done in the first place, more with serving as enablers than as counselors. I therefore wasn’t surprised to learn that when Enron fell over like a tall tree, disclosing roots that were rotten and vermin-riddled, among the grubs, beetles and other parasites to be observed blinking in the unwelcome daylight was Vinson & Elkins.

De mortuis etc. … and David Searls is long dead and had no part in this, but attitudes do tend to institutionalize within firms, to become part, as it were, of the genetic material. Before taking its current name, the firm went through an interlude as Vinson, Elkins, Searls & Connally, when there was added to the names on the door another old East Texas snapper-mouth, John Connally, the late former governor and Treasury Secretary who would be crushed like Laocoön in the coils of public- and private-sector scandal and insolvency. Someone once asked me, “What do you think went through Connolly’s mind when he was proffered the envelope with the milk-fund money for Nixon?”

By then I knew the Houston good-old-boy form, and my reply was a matter of reflex: “Hell, that’s easy. He was just trying to figure out which pocket to stick it in.” That’s the sort of answer that marks a lawyer as the sort of folks you can “work with.”

Vinson & Elkins-which signed off on a whole bunch of misleading accounting stuff and very likely honchoed the setting-up of Enron’s hundreds of offshore tax havens-will be one of the deep pockets that those seeking Enron redress will go after, and that’s probably as it should be. My purpose is not to rail at lawyers and the distortions in the law. Suffice it to note that of the 11 men elected to the Presidency in my lifetime (Gerald Ford doesn’t count), only three (F.D.R., Nixon and Bill Clinton) were lawyers by training. Of these, two-fully 67 percent-came close to being impeached, which seems a high ratio and cause for alarm.

The more interesting aspect of the big law firm’s enabling role in all this is symbolic, as I see it. Because-as I see it-Enron is the crowning metaphor for the Clinton ascendancy. Its operating philosophy-“How much can I get away with?” (endorsed by the big energy-trader’s lawyers, accountants, politicians-in-pocket and so on)-was the very mantra by which this nation, from the White House on down, began to live in 1995. This was the period during which the worser hens of our nature laid the eggs from which have been hatched the jetliner-sized chickens that have come home to roost, at a cost beyond calculation, beginning last autumn.

Why 1995? Because that was our first big, defining get-away-with-it moment-namely the O.J. Simpson trial and verdict. From that time forward, it seems to me, this nation operated, in policy and pragmatically, as if to test the limits of what could be gotten away with in every sphere of action: in world affairs, with the dollar, with the personal conduct of the President, on Wall Street (considered globally), in matters of private and public deportment and taste.

It’s hard to recall, especially in the wake of 9/11, how massively involved the nation was with the O.J. trial. In the opinion of most citizens, led by Dominick Dunne, whom the trial “Midasized”-I’m talking about transmutation, not muffling, which might have been preferable-into a sort of ubiquitous Jessica Fletcher in drag, O.J. got away with it (although this veteran Law & Order watcher considers the allegation to have been unproven by capital-crime standards). And if he could, why not everyone else? Why not you; why not me?

Without our realizing it, the O.J. verdict may have unleashed a plague of belief that actions needn’t have consequences. Every man and woman-and child old enough to order an AK-47 on the Internet-could be his own O.J. And why not?

And so Ken Lay and his minions and John Meriwether practiced O.J. finance. J.P. Morgan developed O.J. banking. Clinton was the O.J. of fellatio. Wherever one looked, there were Art O.J.’s and Literary O.J.’s. Harvard’s Department of Racial Opportunism competed with the University of Illinois’ Stanley Fish to be the O.J. of Academe. I guess you could say Tina Brown was the O.J. of magazines. God knows, for a while there, wherever one looked, there was It frequently seems as if there are 535 legislative O.J.’s ensconced on Capitol Hill. From 10/95 to 9/11, the point of a well-judged American life had largely ceased to be truth or beauty or quality or decency or fair play or a better world or a better mousetrap; it was about getting away with it and how much, and getting caught didn’t matter so why not take the chance?

And then the music stopped. Reality-in the form of what Kipling called “The Gods of the Copybook Headings” in his 1919 poem-returned, carrying a big, lethal stick.

The Kipling reference isn’t original with me. I read it recently in an article about Enron, but carelessly mislaid my note of the proper source, the writer who had the wit, memory and scholarship to make the connection. To him or her, I apologize for not giving credit by name.

The citation prompted me to look up the poem, and I hope that he or she who inspired me to do so won’t mind if I add two additional stanzas to their citation (the “They” in the poem is, of course, “the Gods of the Copybook Headings”):

We were living in trees when they met us. They showed us each in turn

That Water would certainly wet us, as Fire would certainly burn:

But we found them lacking in Uplift, Vision and Breadth of Mind,

So we left them to teach the Gorillas while we followed the March of Mankind.

With the Hopes that our World is built on they were utterly out of touch.

They denied that the Moon was Stilton; they denied she was even Dutch.

They denied that Wishes were Horses; they denied that a Pig had Wings.

So we worshipped the Gods of the Market who promised these beautiful things.

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew,

And the hearts of the meanest were humbled and began to believe it was true

That all is not Gold that Glitters, and Two and Two make Four-

And the Gods of the Copybook Headings limped up to explain it once more.

The Roots of Enron