Enron cocktail of cash, sex and fast living
(Filed: 28/01/2002)
HOUSTON provided the stage for the energy giant's
meteoric rise - and the crash that will reverberate
for years.
Philip Delves Broughton reports
Enron was a company in love with itself. Office affairs
were rampant, divorce among senior executives an
epidemic, and stories of couples steaming up glass-walled
offices after late-night meetings were the talk of Houston.
"It was insane," says a former energy trader, soothing
her financial injuries with a margarita.
"There were no rules for people, even in our personal
lives. Everything was about the company and everything
was supposed to be on the edge - sex, money, all of it."
But the music has suddenly stopped. Savings and
pensions have been wiped out, careers destroyed and
America's version of free-market capitalism dragged into
the interrogation room.
The reverberations of Enron's collapse will be felt for
years in Washington, where the political witch-hunt is
gaining pace, and on Wall Street, but nowhere more so
than in Houston, the stage for Enron's gaudy act.
From the mid-1980s, when Enron was created by the
merger of two energy companies, Houston became its
town. The company filled the void left by the oil
companies, whose buccaneering days had been ended by
the collapse in oil prices.
In River Oaks, the smartest suburb of Houston, home to
the likes of the former president, George Bush, Enron
executives began building huge mansions.
Jeff Skilling, the executive who transformed Enron under
the more genteel rule of Ken Lay, the former chief
executive, decorated his house all black and white,
Enron's corporate colours, from the marble to the sofas to
the flowers, wallpaper and pictures.
The Enron wives became known around town for their
Mercedes, fur-trimmed sweaters and leather trousers.
But in the excitement, Enron lost touch with its mortality.
Skilling wanted it to become an alternative to the Wall
Street banks.
He wanted to recruit the best, which meant persuading
the leading business school graduates, from places such
as Harvard and Stanford, to choose Houston over New
York or Silicon Valley.
He did so by creating the same culture of unself-conscious
greed and reward which Wall Street was forced to
suppress by the insider-trading scandals of the late
1980s. He built his own Bonfire of The Vanities in Houston
and everyone wanted to feel its warmth.
Managers employed a system known as "rank or yank".
Every employee's performance was ranked 1-5. Five
meant you were out. The bottom 15 per cent of workers
were fired each year.
For the best workers the incentives were staggering.
Bonus day was known at the company as Car Day,
because of the lines of extraordinary sports cars arriving
for the most successful employees.
To the outside world, Enron described itself as a family for
which employees were delighted to work punishing hours.
Inside it became increasingly incestuous, sexually and
financially.
While the accountants came up with schemes for Enron to
credit itself with vast and phoney profits to look good on
Wall Street, the traders and consultants, often new to
Texas, found themselves immersed in the Enron culture.
Only those at the top and the traders who saw the kinds
of wild bets Enron was placing, on everything from oil to
the weather, saw how precarious the whole thing was.
They knew it was a house of cards and began pulling out
as much money as they could.
The best brains began demanding vast salaries to stay
and, to save face, Skilling paid them. Then they asked for
more. Senior executives began selling their shares in
huge blocks. Everyone at the top was cashing out while
those further down believed the hype.
"We all thrived on the buzz," said Mark Lindquist, 39, a
web designer who lost his £39,000-a-year job and is now
struggling to pay for his autistic son's treatment. "It
seemed like we were part of something incredible."
More than two thirds of Americans now believe that the
Bush administration is either hiding something or lying
about its relationship with Enron, according to a CBS-New
York Times poll.
Although no allegations of wrongdoing have been made
against the White House, the poll underlined the political
damage that could be inflicted on Mr Bush by the collapse
of Enron, which was a major contributor to his presidential
election campaign.
A post mortem examination at the weekend confirmed
that Clifford Baxter, 43, whose death on Friday escalated
the scandal, had shot himself with a revolver. Mr Baxter
resigned as Enron vice-chairman last May after clashing
with fellow executives over the company's practices.
telegraph.co.uk |
