24 Days: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America

434 Pages·2004·1.52 MB·English

by  Smith R.

24
DAYS
How Two Wall Street Journal Reporters
Uncovered the Lies That Destroyed
Faith in Corporate America
Rebecca Smith and John R. Emshwiller
To Kevin and Susan, my beloved children,
and to people who tell the truth, no matter what.
—ras
To Molly, Rebecca and Deborah, now and forever.
—jre
Contents

Acknowledgments vii
Prologue to the Paperback Edition ix
PART ONE
Red Sky Warning
1 “Our CEO Is Resigning.” 3
2 “Who’s Andy Fastow?” 12
3 “You Won’t Believe What Skilling Just Told Me.” 22
4 “I Have Found That Mr. Lay Doesn’t Take Kindly
to Criticism.” 31
5 “It Isn’t a Conflict of Interest.” 42
6 “You’re Just Scratching the Surface.” 47
7 “You Are About to Topple a $20B House of Cards.” 57
8 “I Want to Be CFO of the Year.” 67
9 “It’s Okay to Have a Conflict.” 76
10 “Make the Journal Go Away.” 83
11 “He Would Have Done Nothing to Harm Enron.” 89
12 “Amend My Last Statement.” 94
iv Contents
PART TWO
The 24 Days
13 “I’m Not Sure It Had a Name.” 104
14 “You Missed Something That Could Be Really Big.” 119
15 “Looks Like the SEC Read Your Stories.” 134
16 “There Is an Appearance That You Are Hiding Something.” 142
17 “I Must Have Heard the Term Death Spiral a Dozen Times
Today.” 156
18 “Oh, I Expect to Be in the Office All Weekend.” 172
19 “Those Liars!” 183
PART THREE
The Party’s Over
20 “Does Ken Lay Know About This Meeting?” 193
21 “Don’t Approach Their People Again.” 210
22 “At Least We’re Going to Be Part of the Biggest
Bankruptcy Ever!” 220
23 “Laydoff.com” 228
PART FOUR
Aftershocks and Revelations
24 “There Will Be Something Else Fun and Exciting on the
Other Side.” 241
25 “Enron Has a Problem You May Want to Write About.” 258
26 “I Really Got Sucked into This One.” 271
27 “We Notified Enron’s Audit Committee of Possible Illegal Acts
Within the Company.” 278
28 “Do You Guys Have a Shredder Here?” 286
29 “I Didn’t Look Closely. I Didn’t Want to Know Too Much.” 296
30 “You’ve Got to Be Kidding Me.” 306
31 “I Feel I Just Can’t Go On.” 313
Contents v
32 “There Was a Young Turk Arrogance.” 329
33 “Next Time Fastow Is Going to Run a Racket, I Want to Be
Part of It.” 341
34 “Often He Was Just Goofy.” 345
PART FIVE
The Perp Walk
35 “The Arrogance. The Lack of Accountability.” 353
36 “Enron’s CFO, Kopper, and Others Devised a Scheme to Defraud
Enron and Its Shareholders.” 363
37 “If It Isn’t Criminal, It Ought to Be.” 373
Index 399
About the Authors
Credits
Cover
Copyright
About the Publisher

Acknowledgments

Many people contributed to this book. Thanks must begin at
our favorite newspaper, the Wall Street Journal. Numerous colleagues did
terrific work prying open the Enron puzzle box. All were generous with
their time when we sought their assistance. We felt very fortunate to
work with some of the best reporters and editors in the country on a
story that turned into an unexpectedly long ride. Though many earned
our gratitude, we’d like to give particular thanks to: Alexei Bar-
rionuevo, Mitchel Benson, Karen Blumenthal, Marcus Brauchli, Ken
Brown, Barney Calame, Jeanne Cummings, Chip Cummins, Bob Davis,
Larry Greenberg, Bryan Gruley, Tom Hamburger, Thaddeus Herrick,
Greg Hitt, Larry Ingrassia, Steve Liesman, Gary McWilliams, Mike
Miller, Mitch Pacelle, Scot Paltrow, Martin Peers, Ellen Pollock, Susan
Pulliam, Anita Raghavan, Robin Sidel, Jay Sapsford, Mike Schroeder,
Ellen Schultz, Leslie Scism, Mike Siconolfi, Glenn Simpson, Randy
Smith, Scott Thurm, Jonathan Weil, John Wilke, and Stephen Yoder.
We’d also like to thank managing editor Paul Steiger and deputy man-
aging editor Dan Hertzberg for their unwavering enthusiasm and grit in
chasing the Enron story—wherever it led us—as well as their willing-
ness to grant us leaves of absence to write this book. Among our current
and former colleagues in the Journal’s Los Angeles bureau, particular
thanks go to Ben Holden, Kathryn Kranhold, Andy Pasztor, Rhonda
Rundle, Rick Wartzman, and, of course, to our boss, the Journal’s L.A.
viii Acknowledgments
bureau chief, Jonathan Friedland, who was the editor most involved in
shaping the paper’s Enron coverage and who pushed us to tell the story
“in long form” through this book.
Getting beaten on a story is never fun. But, over the months of cov-
ering the story, many of our competitors added greatly to our under-
standing of Enron even as their work spurred us to dig harder. Some of
the best work on Enron was done by Peter Behr and April Witt of the
Washington Post, Peter Eavis of TheStreet.com, and Kurt Eichenwald and
Floyd Norris of The New York Times, to name a few.
Numerous individuals who worked at Enron, or were connected to it
in important ways, shared with us their precious documents and invalu-
able insights and experiences. Neither the stories we wrote for the news-
paper nor this book would have been possible without their help. In a
real sense, this book is devoted to the many Enron people who rendered
honest and faithful service to the company, its shareholders, and society.
Several of them took professional risks to get the unvarnished truth to
the public. Some are named in this book, but several have asked us to
preserve their anonymity. To each, we give heartfelt thanks and hopes
for a satisfying post-Enron life.
Many others helped us get this book into print. Our agent, Geri
Thoma, was ever steady and cheerful. The people at HarperCollins—
particularly Cathy Hemming, Steve Hanselman, Marion Maneker, Jeff
Stone, and our principal editor there, Dave Conti—greatly helped focus
this project and bring it to fruition. But on the editing front nobody de-
serves more praise than Victoria Pope, an accomplished writer and edi-
tor, whose clarity, patience, and good humor helped keep us moving
forward.
Last, but hardly least, we offer deepest thanks to our family members
and friends, most especially Eugene Bryant, Christine Ervine, Michael
Miller, Elena Schmid, Steven Smith, and Bradley Warren, whose read-
ing of the manuscript, at various stages, or unflagging moral support and
assistance on the home front provided a bulwark against the pressures of
the past two years.