Pipe Dreams: Greed, Ego and the Death of Enron

<body stylesrc="../_private/template_title.htm" topmargin="10" leftmargin="10" bgcolor="#FFFFFF" link="#333366" vlink="#000000" alink="#000000"> <div align="left"> <table border="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" cellpadding="0" id="table2"> <tr> <td width="780" align="center"> <div align="center"> <table border="0" cellpadding="5" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table3"> <tr> <td align="right" height="198" width="1%"> <p align="left"> <img border="0" src="../images/book_bryce_robert_(2002).gif" width="132" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" id="table4"> <tr> <td colspan="3" width="0%"> <p class="book_title">Pipe Dreams<br> <span class="book_title_sub">Greed, Ego, and the Death of Enron</span></td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> <img border="0" src="../images/blank_2x2.gif" width="2" height="2"><img border="0" src="../images/blank_2x2.gif" width="2" height="2"></td> <td width="52%" class="book_details_tags" valign="top" height="144" align="left" rowspan="9"> <map name="FPMap2"> <area href="../main/ratings.htm" shape="rect" coords="74, 0, 165, 33"> </map> <img border="0" src="../images_title/bryce_30.gif" usemap="#FPMap2" width="167" height="158"></td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" height="32" align="center" width="50%" rowspan="2"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> </tr> </table> </td> </tr> </table> </div> <table border="0" cellpadding="10" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="468" id="table5"> <tr> <td> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> <table border="0" cellpadding="5" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table6"> <tr> <td width="45%" valign="top" rowspan="2"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table7"> <tr> <td width="100%" bgcolor="#333366"> <p class="header_yellow" align="center">Contents</td> </tr> <tr> <td width="100%" class="explanatory_text"> <table border="1" cellpadding="0" cellspacing="5" style="border-collapse: collapse" bordercolor="#CCCCFF" bgcolor="#CCCCFF" width="100%" id="table8"> <tr> <td class="contents_expanded"> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">1. The Job Fair</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">2. John Henry Kirby and the Roots of Enron</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">3. Buy or Be Bought</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">4. The Merger</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">5. The Lays Move to River Oaks</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">6. The Valhalla Fiasco</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">7. "The Smartest Son of a Bitch I've Ever Met"</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">8. Banking on the Gas Bank</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">9. Mark-to-Market Account-a-Rama</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">10. Enron Goes International: Teesside</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">11. The Big Shot Buying Binge</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">12. "Kenny Boy"</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">13. The Dabhol Debacle</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">14. OPIC: Sweet Subsidies</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">15. A Kinder, Gentler Enron</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">16. The Reign of Skilling</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">17. "A Pit of Vipers"</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">18. Cash Flow Problems, Part I</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">19. Chewco: The 3-Percent Solution</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">20. Sexcapades</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">21. The Family Lay</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">22. LJM1</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">23. Buying Off the Board</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">24. The Deal Diva</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">25. Enron's Waterworld</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">26. Hyping the Bandwidth Bubble</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">27. Andy Fastow Arrives...in River Oaks</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">28. Strippers and Stock Options</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">29. Casino Enron: Cash Flow Problems, Part 2</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">30. LJM2</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">31. The Big Five Versus the SEC</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">32. Derivatives Hocus-Pocus</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">33. Ken Rice: Missing in Action</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">34. Analysts Who Think</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">35. Air Enron</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">36. Skilling Says a Bad Word</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">37. George W. to the Rescue, Part 1</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">38. Broadband Blues</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">39. Sleepless in Houston: Cash Flow Problems, Part 3</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">40. Sherron Watkins Saves Her Own Ass</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">41. George W. to the Rescue, Part 2</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">42. You Gotta Have Art</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">43. Revenge of the Raptors</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">44. "An Outstanding Job as CFO"</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">45. Fastow Goes Bye-Bye</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">46. Posh PJ's</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">47. Greenspan Gets the Enron Prize</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">48. One Restatement Too Many</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">49. The Downgrade</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">50. The Bankruptcy</p> <p class="contents_compressed" style="margin-top: 8; margin-bottom: 8">51. Epilogue: "Salvation Armani"</td> </tr> </table> </td> </tr> </table> </td> <td width="55%" valign="top" class="body"> <p align="left" class="body_expanded" style="margin-bottom: 10"><strong style="font-weight: 400">Following the spectacular 2001 collapse of energy trading firm Enron, some excellent books were published. This, and the subsequently published McLean and Elkind (2003), are the best.</strong></p> <p align="left" class="body_expanded" style="margin-top: 10; margin-bottom: 10"><strong style="font-weight: 400">Bryce is a journalist who has been covering Enron since 1997. This means that he came to the task of writing this book well prepared. He already knew much of the history and a fair amount of the intrigue. He had plenty of contacts. He pulled these resources together and the result is <i>Pipe Dreams</i>, a remarkable book offering insights that are timely, deep and unavailable anywhere else. It is also a fun read.</strong></p> <p align="left" class="body_expanded" style="margin-top: 10; margin-bottom: 10"><strong style="font-weight: 400">The book traces the history of Enron back to 1901 when Henry Kirby, a timberman, entered the oil business. In 1985, Ken Lay merged Houston Natural Gas and InterNorth and named the combined firm Enron. An indication of his </strong><font size="-1"> laissez-faires management style came <strong style="font-weight: 400">in 1987 when there were strong indications that traders operating out of a Valhalla New York office were manipulating the books. Lay failed to confront them. Resulting losses almost bankrupted the firm.</strong></font></p> <p align="left" class="body_expanded" style="margin-top: 10; margin-bottom: 10"><strong style="font-weight: 400">Moving into the 1990s, the book charts the fierce rivalry between Rebecca Mark pursuing an "international" strategy and Jeff Skilling pursing an alternative "asset lite" strategy. It documents President and COO Rich Kinder's fall from power (it involved a woman) and hasty departure from Enron. This incident, more than any other, sealed the firm's fate. The book also delves into CFO Andy Fastow's off-balance-sheet special purpose vehicles that hid billions of dollars in debt and siphoned 45 million dollars into his own pockets. It details the firms network of political connections with both the Democratic and Republican parties; its fierce "rank and yank" corporate culture; its misguided initiative in bandwidth trading; and its ultimate descent into bankruptcy.</strong></p> <p align="left" class="body_expanded" style="margin-top: 10; margin-bottom: 10"><strong style="font-weight: 400">There are two aspects of this book that really recommend it. First, it ties things together well. There were many factors leading to the demise of Enron. <i>Pipe Dreams</i>, more than any other book, captures the interrelationships between these, allowing us to place events in context. Second, the book lets us get to know the players as real human beings. It takes us into their board rooms, living rooms and bed rooms and shares with us their personalities. It is humans that build companies, and humans tare them down. By showing us the personalities of Enron, Bryce allows us to understand what really went wrong.</strong></p> <p align="center" class="body"> </p> </td> </tr> <tr> <td width="55%" valign="bottom" class="body" align="left"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table9"> <tr> <td width="100%"> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> </td> </tr> </table> <div align="left"> <div align="left"> <table border="0" cellpadding="10" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" bgcolor="#CCCCFF" id="table10"> <tr> <td width="100%" align="center"> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> </div> <table border="0" cellpadding="6" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" bgcolor="#FFFFCC" id="table11"> <tr> <td width="100%" align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" bgcolor="#FFFFCC" id="table12"> <tr> <td> <p class="body" style="margin-bottom: 6; margin-left:10"><b><font color="#333366" size="3">For related books, see sections:</font></b></p> <p class="bullet" style="margin-left: 10; margin-top:5; margin-bottom:5"> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/history_enron_books.htm">History - Enron Debacle</a></p> <p class="bullet" style="margin-left: 10; margin-top:5; margin-bottom:5">  <p class="bullet" style="margin-left: 10; margin-top:5; margin-bottom:5"> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/history_bubbles_and_blow_ups.htm">History - Bubbles and Blow Ups</a></td> </tr> </table> </td> </tr> </table> </div> </td> <td>  </td> </tr> </table> </div>  <table border="0" style="border-collapse: collapse" width="100%" cellpadding="0" id="table1" bgcolor="#FFFFFF"> <tr> <td colspan="2" height="12"> <p style="margin-top: 0"> </td> </tr> <tr> <td align="right"> <p align="left" style="margin-bottom: 2px"> <a target="_top" href="http://www.riskexpertise.com/link/advertising.htm"> <font size="1" color="#000000" face="Arial">Ads by Contingency Analysis.</font></a></td> <td align="left"> <p align="right" style="margin-bottom: 2px"> <a target="_top" href="http://www.riskexpertise.com/link/advertising.htm"> <font size="1" color="#000000" face="Arial">Advertise on this site.</font></a></td> </tr> <tr> <td align="center" colspan="2">  <iframe src="http://servedbyadbutler.com/adserve/;ID=147917;size=300x250;setID=93136;type=iframe" allowtransparency="true" background-color="transparent" style="margin: 0px; padding: 0px; border-width: 0px" width="300" height="250" frameborder="0" marginwidth="0" marginheight="0" scrolling="no"> <![if lt IE 4]> <script src="http://servedbyadbutler.com/adserve/;ID=147917;size=300x250;setID=93136;type=js" type="text/javascript"> </script> <noscript> <a href="http://servedbyadbutler.com/go2/;ID=147917;size=300x250;setID=93136"> <img src="http://servedbyadbutler.com/adserve/;ID=147917;size=300x250;setID=93136;type=img" border="0" height="250" width="300" alt=""></a> </noscript><![endif]> </iframe>   </td> </tr> </table> <p align="center" style="margin-top: 20"> <map name="FPMap0_I1"> <area href="http://www.riskbook.com" shape="rect" coords="0, 0, 184, 29" target="_top"></map> <img border="0" src="../images/open_book_riskbook.gif" usemap="#FPMap0_I1" width="185" height="30"></p> <p class="a" align="center"><font face="Arial" size="2"><a href="../main/disclaimer.htm">disclaimer</a></font></p> <p class="a" align="center"><span class="verdana10">website:</span> <a target="_top" href="http://www.contingencyanalysis.com"> <font size="2" face="Arial">http://www.contingencyanalysis.com</font></a><br> <span class="verdana10">books direct link:</span> <a target="_top" href="http://www.riskbook.com"><font size="2" face="Arial">http://www.riskbook.com</font></a><br> copyright <font face="Times New Roman">©</font> Contingency Analysis, 1996 - current</p> <p class="a" align="center"><map name="FPMap1_I1"> <area target="_top" href="http://www.contingencyanalysis.com" shape="rect" coords="0, 0, 240, 88"> </map><img border="0" src="../images/logo_book_white.gif" usemap="#FPMap1_I1" width="241" height="89"></p>  </body>