The article you referenced below brought up some very interesting questions.............and not only about Enron....Questions that probably should be asked about many, many companies, stocks, accounting procedures, and Wall Street procedures as well.............
The Enron Story That Waited To Be Told
By Howard Kurtz
Washington Post Staff Writer
Friday, January 18, 2002; Page C01
Some of my random thoughts regarding the article:
Good for Bethany McLean, the Fortune reporter!!!! She certainly got the attention of Enron's top management....
The Houston energy company didn't like her questions. The CEO, Jeffrey Skilling, called her unethical and hung up on her. The chairman, Kenneth Lay, called Fortune's managing editor to complain. The chief financial officer, Andrew Fastow, flew to New York to tell McLean and her editors that Enron was in great shape.
If Ms. McLean wondered:
she wrote in Fortune's March 5, 2001, issue. "How exactly does Enron make its money? Details are hard to come by because Enron keeps many of the specifics confidential. . . . Analysts don't seem to have a clue." All this amounted to a "red flag" that "may increase the chance of a nasty surprise."........
I wonder why she seems to be the only "reporter" who wondered (or SEC, or Brokerage, or media for that matter........
While I'm wondering this, I'm wondering who owns Fortune (AOL-TimeWarner does, and searching that out, was simply amazed at the number of publications they own.....) and then really wondered why one lone reporter out of this media empire was perhaps one of just a very few to ask those questions.
Then wondered who and how much the Companies and the top officers of each of the separate companies of each AOL-TimeWarner and the New York Times, etc donated to what political party.....(Note: check opensecrets.org )
Could this be why not much was said before now....did the media, at all levels, think that perhaps they could undermine the Bush White House?
Political reporters joined the fray after learning that Enron had sought help from the Bush White House. Teams of business journalists are digging into the largest corporate meltdown in American history.
More from the article>>>>>>>>>>>
"It's fair to say the press did not do a great job in covering Enron," says Steve Shepard, editor-in-chief of Business Week magazine, which ran only briefs on the company's financial problems until a cover story in November. "Enron was really a systemic failure of all the checks and balances we have on corporate governance: integrity of management, board of directors, audit committee of the board, outside accounting firm, Wall Street analysts and ultimately the press. And all of us failed."
Most Wall Street analysts had a buy rating on Enron stock.
Indeed, only one group wanted Enron's stock to tank: the short-sellers, professional traders who bet on a stock's decline. One short-seller, Jim Chanos of Kynikos Associates, suggested to Fortune's McLean that she look at Enron's Form 10-K, a required annual filing with the Securities and Exchange Commission.
McLean says she understood Chanos's motive but was struck by the document. There were "strange transactions," "erratic cash flow" and huge debt. "It made you wonder, if their business was so phenomenally profitable, why they had to be adding debt at such a rapid rate," she says.
Ironically, Fortune's own surveys had named Enron America's most innovative firm for six straight years, and much of the coverage was similarly upbeat.
Here again, one has to wonder why the media only focused on politics --- Enron had been around for many years...Why didn't the media start asking questions several years ago? Or were the number of subsidiaries new for Enron in the year 2001? WHEN did Enron start that practice?.....
More from that article:
There were a few critical pieces, but they mainly focused on politics.
In February, the Los Angeles Times reported on the close ties between Lay and the president, noting that Bush had flown on Enron jets during the campaign. In March, The Washington Post ran a piece on Lay's growing influence. In May, the New York Times quoted the federal government's top electricity regulator, Curtis Hebert Jr., as saying Lay had offered to support his continued tenure if he changed his views on energy deregulation. Hebert says he declined. Bush replaced him months later.
In August, at a Fortune conference in Aspen, Lay told Rik Kirkland, Fortune's managing editor, that Enron really disliked McLean's story. A week later, Skilling quit as CEO after just six months on the job, calling it a "personal decision."
.......Business Week's Shepard says. "The failure of the press was not saying, 'What's going on here?' "
But hard information was scarce. "It's almost as if you have to use forensic accountants when you're doing a company story because many companies are using very aggressive accounting techniques that are perfectly legal," Shepard says.
This will probably become more important>>>>>>>>Enron fired Fastow in October for overseeing questionable off-the-books partnerships, and in November the company admitted overstating its profits by $600 million. <<<<<<<<
Again, one wonders WHY.........
Even Enron's Dec. 2 declaration of bankruptcy failed to make the front pages of USA Today, The Washington Post, the Boston Globe and the Philadelphia Inquirer. The CBS, NBC and ABC evening newscasts each gave the announcement two sentences. The media were still heavily focused on the war in Afghanistan.
"It was a gutsy thing to do," Kirkland says. "We trusted her. When you look back it's obvious: Why weren't we all asking these questions?" |
