Enron Debacle: Review Of Kurt Eichenwalds Conspiracy Of Fools A True Story

Title: Conspiracy Of Fools: A True StoryAuthor: Kurt EichenwaldPublisher: Broadway Books (A division of Random House)ISBN: 0767911784

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, http://www.bookpleasures.com and the travel site, http://www.sketchandtravel.com.

Norm is also a travel writer and he and his artist wife, Lily Azerad-Goldman meld words with art focusing on romantic destinations.

Bookpleasures.com comprises a group of over 25 prestigious international reviewers who review all genre.There is also a section on the site devoted to author interviews.

All book review requests are welcomed.

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Book Reviews Information:

Related Articles

Second Eden Book Review
"Carlton Austin has crafted a wonderful piece of work in Second Eden - an action-packed suspense thriller with a little romance and some elements of science fiction. Its beautifully designed cover incorporates gorgeous images depicting scenes within the plot and the book is available in both hard and soft cover.
Book Release: Ginas Poems - Adventures in Love
Book Release: Gina's Poems -- Adventures in LoveWritten & illustrated by Siegfried J. HegerISBN 0-9763503-0-0 Perfect Bound, 72 pages, (8.
Profitable Growth Is Everyones Business - A Book Summary
The days of ruthless downsizing and drastic cost cutting are long gone. Nowadays, companies have realized that the best way to earn profit is only through growth - profitable growth.
How to Survive Sudden Leadership Challenges - Covey Has Some Clues
I have decided to start with this text as simply far too many people have said to me I should - it clearly has an enormous following of people who found the message rang true for them.In the introduction to the 7 Habits of Highly Effective People Covey talks about how we perceive reality based on certain beliefs or paradigm.
The Road of Silk: Book Review
"The Road of Silk is an adventure fantasy, with mystical and magical elements and a high energy feel to it that any reader will enjoy. Although this novel is written for an adult audience, I believe anyone over the age of 10 could easily become immersed in its pages.
Entrepreneurs Reach Record Income Levels Using New EBook on Adsense and Adword Techniques
The "Rich Jerk" has created quite a stir on the Internet about his new ebook revealing secrets on how to use use Google Adwords and Adsense for big profits. He has recently sold a website on eBay for $390,000 that had a $900,000 annual return.
Shattered Memories, Scattered Emotion - Review
Betty Woodrum released her first book of poetry entitled Shattered Memories, Scattered Emotions in on July 16, 2005. Her poetry is clean and simple and extremely honest.
Putting it on Paper - Book Review
"Dawn Josephson, author of 14 books, has written a fantastic author resource with her latest book Putting it on Paper - The ground rules for creating promotional pieces that sell books. This book discusses the development and use of contents within a media kit, and other marketing materials.
Reality Checked - Book Review
Reality Checked - Life through Death, is a moving saga about finding meaning in a world of suffering and pointless hate based on the color of skin. Former school teacher and Theologist, Victor Waller has incorporated many of life's issues through the lives of his characters who were forced to make decisions in hopeless situations.
The Seventh Jewel - Book Review
The Seventh Jewel is a fantasy-adventure fiction geared for youth (ages 11 and up). J.
FDA Approved Vagus Nerve Stimulation Therapy Can Improve The Quality of Your Life
As of August 2005, the U.S.
Moon Child - Review
Moon Child by Simone Maroney is a larger sized adventure, fantasy novel with 55 chapters. The story line involves complex relationships between six main characters, which are delicately balanced leaving room for intrigue.
Product Review: Quick and Easy Ways to Instantly Mine Pure Gold from WordTracker
The other day I was surfing the net looking for resources relating to WordTracker. WordTracker is, in my opinion, one of the top two market research tools on the net.
Ferns Dragon - Book Review
"Fern's Dragon is a wonderfully fun read that stimulates the imagination of both young people and the young-at-heart alike. It is a good mystery-fantasy story that is artfully composed.
Health Is Internal Beauty
Excerpted from the book "Your Right to Be Beautiful: How to Halt the Train of Aging and Meet the Most Beautiful You" by Tonya Zavasta. The book is available at: http://www.
The Southwest Airlines Way - AchieveMax® Top Ten Book Review
Over the years, several books and countless magazine and newspaper articles have been written about Southwest Airlines. Numerous MBA programs highlight the Southwest structure, its culture, its CEO, its low fares and other reasons as to why it is the bright spot in an otherwise dismally performing industry.
Dragon Tales - Book Review
Dragon Tales by Mary C. Fairbanks is truly and entertaining book, chock full of twenty-four dragon stories.
Primal Leadership - A Book Summary
Primal leadership takes center stage in this book. This concept goes beyond the set of conventional competencies on the making of a leader.
Twin Falls, Gooding, Jerome, ID, and Regional Economic Outlook for 2005
Twin Falls Economic Report done by me; Twin Falls, ID has potential for additional car washes, Detail Centers and mobile washing units. Twin Falls has enough water in their reservoirs to make it through the Summer for farmers and agriculture industries.
Straight from the Gut - A Different Take on Business
Jack Welsh, the recently retired CEO of General Electric, presents a rare glimpse into how to build a successful organization in his book, "Straight from the Gut." His honesty and openness is refreshing and reaffirms that success is sometimes built from failure, but more often from calculated planning and the willingness to take risks.