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Book Review: Conspiracy of Fools: A True Story by Kurt Eichenwald

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We all know in general terms what happened to Enron, but Kurt Eichenwald somehow manages to make this oft-told tale into a page turner in Conspiracy of Fools: A True Story. Although Eichenwald’s expansive use of dialog makes me wonder how closely the book adheres to its aspirational subtitle, his description of the research underlying the book and his attention to detail throughout give the book an air of believability. Still, if you want details about Enron’s accounting shenanigans, read The Smartest Guys in the Room or Power Failure (or one of the many academic papers out there describing Enron’s wild accounting), but if you love a great story, this is the Enron book for you.

Eichenwald’s ability to make the story compelling and suspenseful, even when we know the outcome, is enviable. He creates tension by unfolding the story slowly through thousands of vignettes, each recounting a conversation, an email, a recollection, an encounter, or a development that reveals Enron’s mounting troubles from the perspective of an omniscient insider. It is almost like a collection of polished research notes, and knowing the story in advance actually enhances understanding. (Indeed, if someone were coming to the Enron story for the first time through this book, they might justifiably complain that the book is disjointed.)

With Ken Lay, Jeff Skilling, and Richard Causey still awaiting trial, this book may shed light and the possible course of prosecution. In Eichenwald’s telling, the primary engineer of Enron’s demise was CFO Andy Fastow, who is portrayed as simultaneously incompetent and venal. He had plenty of help from other Enron employees like his wife Lea Fastow, "head of special projects" Michael Kopper, and treasurer-turned-lapdog Ben Glisan, all of whom are in prison or on their way. And then there are the outsiders, like David Duncan, Arthur Andersen’s sycophantic partner in charge of the Enron audit team. And the investment banks, which recently have been settling claims by Enron shareholders for billions of dollars.

But can we really lay primary blame for Enron at Andy Fastow’s feet? In Eichenwald’s version of the story, Ken Lay comes off as genial and willfully distant from the details of management. (Nelsonian blindness? Hardly!) But not criminal. Similarly, Jeff Skilling is portrayed as a person with enormous emotional baggage, but not criminal. Perhaps that’s why the indictment of Lay and Skilling (along with chief accountant Richard Causey) was so long in coming and so limited in reach.

In the end, you might come away from this book thinking that Enron is a perfect storm. A scheming deal guy (Fastow) wins the trust of an unwitting superior (Skilling), who is anointed for great things by the distant leader (Lay). Fastow follows Skilling up the management hierarchy, along the way assembling a team of minions whose gullibility and/or unscrupulousness enable him to pursue his strange and illogical accounting inventions and fleece the company of millions of dollars. Enron’s market power keeps outside monitors (most notably, the auditors and banks) at bay, and the company’s apparent success creates lax controls at the board and senior officer levels.

The only problem is that Enron wasn’t a perfect storm. Just think WorldCom, Tyco, Adelphia, etc. If Enron had been a solo scandal, Paul Sarbanes would be best remembered as the representative who introduced the first Article of Impeachment, for obstruction of justice, against President Richard Nixon, and Michael Oxley could be best remembered for … what? I have no idea. What makes this book so engrossing is that Enron has already happened many times over and, despite the work of Messrs. Sarbanes and Oxley, it will happen again. Probably sooner rather than later.

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  • http://paperfrigate.blogspot.com Pat Cummings

    This book review has been selected for Advance.net. You’ll be able to find this and other Blog Critics reviews at such places as Cleveland.com’s Book Reviews column.

  • jean e allan

    I would like to know how to get in touch with Kurt Eichenwald either by e-mail or other address.

  • darealdeal

    I just bought the book, and so far- I am not impressed.
    I am hoping it is not purely damage control in disguise.
    It’s a major committment to read (700 some odd pages)-and so I decided to check out the index to get the general scope of this book.
    Nowhere is Hughes Tool Company in the index-which is where Enron was birthed and Ken Lay sat on the Board.
    Nowhere do I see Snohomish Public Utility -which was a huge break in exposing the level of corruption and rip offs.
    In an interview with the director of The Smartest Guys in the Room – I read:

    I also tried to talk to Ken Lay, particularly when he “came out” and started to talk publicly with people like Larry King, and Kurt Eichenwald of the New York Times, whom Lay thought would be sympathetic to his position. But Lay’s representatives would not allow him to meet with me. They even went so far as to attempt to bar me from the press conference he held after his indictment. (They called security guards to have me removed). I made a scene, which I filmed, and Lay’s attorney, Mike Ramsey, relented and let me in.
    http://www.rottentomatoes.com/m/enron_the_smartest_guys_in_the_room/about.php

    Sounds a bit like damage control to me, but I haven’t completely invested in the time to read all of the book, yet.

    In the pages I read on Schwarzenegger, I see that Eichenwald failed to mention the timing relative to the recall movement and the lawsuits against Enron.
    http://www.utne.com/web_special/web_specials_2003-08/articles/10757-1.html
    http://www.gregpalast.com/detail.cfm?artid=282&row=1

    oops….guess that wasn’t very important.
    I do hope Eichenwald discussed the fraud orchestrated and masterminded by Enron with the California Energy Crisis.
    That rip off deserves serious prison time from these elite deviants.

  • http://Urgent-needtofindMr.E Gail DeCaire RN

    I am a Registered Nurse and Retired General Motors Salary employee. Have Proff of HUGE conspiracy/cover-up that transcends ALL levels of OUR legal system. [Personal contact info deleted] IF YOU have Integrity and the Courage to tell the REAL story to AMERICA. UNCLE SAM IS A GOOL OLD BOY! Have letters from the FBI, US dept. of Labor, OSHA, HHS and numerous lawyers who all say DIFFERENT THINGS- I WILL NOT BE SILENT.
    Gail DeCaire RN- The Last GM Nurse

  • http://Urgent-needtofindMr.E Gail DeCaire RN

    L.A.W.S. (Labor Advocates for Worker solutions) went to Washintong in Feb. 06. WE met with numerous politicians reps: John Conyers,Dale Kildee, Carl levine and the US dept. of Labor(Patrick Hyde) AMD MANY MORE. Sadly- NO ONE will address our concerns. Check out movie “IRAQ for SALE” produced by Robt. Greenwald & “take this job and ship it” by Senator Dorgan. IS ANYBODY LISTENING? WE WANT A CONGRESSIONAL HEARING!
    TRUTH IS THE ONLY DEFENSE AGAINST LIBEL AND SLANDER.
    GAIL DECAIRE RN- THE LAST GM NURSE, L.A.W.S & ACORN.