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Pipe
Dreams: Greed, Ego and the Death of Enron by Robert Bryce Rating: ••• (Recommended) |
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Me First If you’re looking for a readable and
plausible explanation of what happened at Enron, why, and how, pick up a copy
of Robert Bruce’s Pipe
Dreams: Greed, Ego and the Death of Enron. Early on, Bryce makes it clear
that the corporate rot, as with fish, started at the top in Enron. Among the
lessons from this book include that the selection of the wrong measure for
success produces the wrong outcome. In Enron’s case revenue was the wrong
measure. Uneven rewards can lead to individual success and corporate failure.
The sum of the parts can be less than the whole. Bryce does a fine job helping readers
understand the character of each individual at the top of Enron. Here’s an
excerpt about the climate of marital misconduct (p. 146-7): A Wall
Street analyst who covered Enron for years said the sexual shenanigans at
Enron became an important part of his take on the company and its financial
statements. The analyst said when someone like Skilling, who has a wife and
three kids and is heading a major company, starts sleeping around, "it
addresses the character of the man.” This is a
guy who felt he could get away with anything. You saw it in his personal life
and his business life." Skilling's
affair with Carter (the two married in early 2002.) was just a facet of the
boys' club at Enron. Several women who worked at Enron said Skilling and the
young traders who dominated the company viewed women as a commodity that could
be bought and sold just like gas, electricity, or any of the other products
Enron was trading. And since Houston's strip clubs are among the best in the
country, it was only natural that Enron's boy geniuses visited them with regularity. Joints
like Rick's Cabaret, Treasures, and The Men's Club were the most popular
venues. Enron executives like Lou Pai reportedly visited them regularly. In
fact, Pal's passion for strippers began costing Enron so much money that Ken
Lay had to lay down the law. Around 1995 after Pai reportedly submitted an
expense report with huge strip club expenditures, Lay sent out a famous companywide
memo that said Enron would no longer reimburse expenses from the strip
clubs. But that
apparently didn't stop Pai. Numerous sources inside Enron say that late one
night in the mid-1990s, Pai brought a pair of women of ill-repute to Enron's
headquarters. Pai took them upstairs to one of the conference rooms and
allegedly had sex with them on the conference table. (Pai has denied ever
taking prostitutes into the building. Lawyers for Pai's wife, Lanna Pai,
refused to comment.) In
addition to the affairs occurring among the company's top managers,
lower-level employees were also booking up for romantic adventures. And in
many cases, it made perfect sense: Enron was a hothouse environment filled
with lots of intelligent, driven young people who worked very long hours and
therefore had few opportunities to mingle with members of the opposite sex
outside of the workplace. Some of those liaisons ended in marriage, of which
there were several among the lower and middle tiers at Enron. And the affairs
at those company levels were not conducted maliciously. Nor were those
workers supposed to be setting an example for the entire company. Ken Lay,
Jeff Skilling, and their highest-ranking lieutenants were. One headhunter
in Houston who worked for a number of energy firms (including Enron) said the
sexcapades at Enron even affected how other companies approached hiring. The
headhunter remarked that in the late 1998, he was doing a top-level
executive search for Dynegy. After he met with Dynegy's top managers to
clarify the skills the company wanted in the new person, the headhunter was
pulled aside by Dynegy's CEO, Chuck Watson. "I want to tell you
something," Watson confided to the headhunter. "On our executive team,
the most important thing is ethics and integrity. All of the executives on
this floor are still married to our first wives. Bring us people who fit our
ethics and integrity." Although
Ken Lay paid lip service to ethics and integrity, he had been compromised by
his own past. As one former top-level Enron executive said, "Leaders
cast shadows." And the shadow that Lay cast at Enron was that of a man
who couldn't, or wouldn't, do anything to put a stop to the sexual
misconduct. One
source close to Lay recalled that several employees complained directly to
him about the oversexed atmosphere at Enron. In at least three instances,
Enron employees wrote Lay and asked him to put a stop to the Ken Rice—Amanda
Martin affair. The source said one letter "came through the office mail
threatening legal action if some steps were not taken" to deal with the
problem. But Lay was reluctant to do anything about it, according to the
source. So the
sexcapades continued. And they became another facet of Enron's corrupt leadership—one
that went hand in hand with the company's corrupt bookkeeping practices.
"The marital misconduct created an atmosphere where things had to be
covered up," …. There’s a certain morbid fascination in
reading about what happened at Enron, and Bryce helps present the accounting
issues and management gaps with clarity. Pipe
Dreams reveals the “me first” attitude at the top of Enron, and the
deeply rooted arrogance and greed among very bright people who thought they
were the best at everything they did. Steve Hopkins, December 23, 2002 |
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ã 2003 Hopkins and Company, LLC The
recommendation rating for this book appeared in the January 2003
issue of Executive
Times For
Reprint Permission, Contact: Hopkins
& Company, LLC • 723 North Kenilworth Avenue • Oak Park, IL 60302 E-mail: books@hopkinsandcompany.com |
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