Customer Reviews

What Went Wrong at Enron: Everyone's Guide to the Largest Bankruptcy in U.S. History

5 star:		(14)
4 star:		(5)
3 star:		(2)
2 star:		(5)
1 star:		(2)

 

 

Let's start with the positives:
- the book is easy to read and reasonably well written;
- the basic facts of the story are covered;
- the book starts the story way back before the problems emerged so that you get a feel for what the business was up to.

But
- it is very short book for such a complex subject
- the "unravelling" - the investigations into "what went wrong" are (ironically) not well covered
- there is almost no coverage of the Andersen issues

So save your dollar, pound, euro or yen - don't waste it on this book.

This books lays out all the gory details of the greed and incompetence that killed Enron. The book works because of the understated and slyly entertaining way that it goes about unraveling the Enron bankruptcy. It is particularly effective because rather than being all preachy and sanctimonious, it presents all the necessary facts and background material to let the reader reach her own conclusions.

The real clue to what the book is about is in the section at the end of the book called "The Enron Files," which contains copies of everything from deal approval sheets that are missing Jeffrey Skilling's signature to the "suicide note" left by Cliff Baxter. These exhibits, though some of them are difficult to read given that they were reduced to fit on a single page, give the whole Enron case a certain X-Files quality. Indeed, the book reads a lot like what Special Agents Dana Scully and Fox Mulder might have written about the case--combining Scully's scientific objectivity with Mulder's talent for psychological profiling of the major perps--in this case Lay, Skilling, and Fastow. Like any good X-Files episode, it raises more questions that it answers. What is truly scary about the whole affair is that there is no alien conspiracy to blame it on, just the lax governmental oversight that Enron bought and paid for with its campaign contributions.

What Went Wrong at Enron is certainly not the last word on this scandal and deals only tangentially with the other scandals that are popping up all around it. Given that story on these scandals is only just beginning, it may be a long time (if ever) until the complete story can be written. Until then, this book provides the important first step in solving the mystery that is Enron.

This book is intended for the lay person. For a quick and easy to understand version of what happened at Enron, read this book. The authors do a good job at summarizing the management personalities, company culture, use of special purpose entities and deception that ultimately led to Enron's debacle.

I have a bad habit of diving into major events years after they occurred. I didn't understand Enron worth spit when it happened, and after reading this book(though the information is useless), I am conversant in the collapse, and picked up some insight about how stupid privately run utilities truly are. Nothing so essential should be left to crafty traders.

I had to read this book for a Finance class in college. It is an interesting and entertaining look at how Enron fell because of deeply corrupt business practices. However, the author does not explain many of the business terms and ventures as well as he should have, with a title that states it should be readable for everyone.

It is not overly complex, but you should have some background in business to truly understand some of the ways that Enron messed up. Nevertheless, this is a well-written book that tells an astonishing story. It is unbelievable that the people who were in power at Enron were so bold.

Fusaro, P. and Miller, R. M., 2003. What went wrong at Enron, Everyone's guide to the largest bankruptcy in U.S. history. John Wiley and Sons, paperback, 240 p.

The moral and cultural lessons of Enron range from the need for ethical behaviour, grounding in truthfulness, honesty, transparency and a need for complete disclosure in accounting and corporate structure. This is the ultimate source of insight into how it all happened. Other sources also point to the underlying dangers represented by a betrayal of trust within the capitalism market system.

The Enron style of approach to flourish in newly deregulated energy and utility markets that have been engineered by governments since the mid 1980s. The levels of executive culpability and it shows the decay and or frailty of underlying value systems which should stand against such events. The events and actions that led to Enron's demise have far more and significant implications to the fate and quality of our own society.

But is Enron a systemic problem or is the ultimate problem the nature of market capitalism itself. If the latter then to avoid more Enron's it is necessary to have moral and ethical tethers to clearly defined absolute terms such as right and wrong (good and evil) in a corporate business environment, otherwise concepts on which an economic system depends, such as trust between all participants, will ultimately breakdown.

Internally, the dynamics of the Enron enterprise set out in this book show a salutary lesson of what should not be present in an apparently healthy and profitable corporate enterprise: failure of 'knowledge conditions', senior management being isolated from those at operational levels (?); individuals pursuing sub-goals that are contrary to overall corporate goals; restrictions on the flows of bad news as opposed to any positive 'spin'.

The underlying causes of an Enron outcome are in fact within the nature of corporations themselves. Their hierarchical structure, limited span of control, self-interest, limited discourse and intimidatory corporate culture all point to a flaw in the nature of many public-listed corporations. Some suggest that the Enron case is one which warrants a revaluation of the shareholder centric model of corporations; management actions should not longer be orientated at maximising the current share price.

Some see the lessons of Enron as being a company that, when in trouble, was unwilling to admit its own shortcomings and thus became driven to cover-up a few bad decisions by making even worse ones. An early admission and some critical changes in operations could have saved the trading side of the business. Instead profit growth at all costs an unwillingness to admit that poor decisions had been made, led to even more exaggeration and fraudulent reporting.

The key problem with Enron was that it had all the surfical signs of a good corporate citizen in place with corporate social responsibility, business ethics tools and status symbols all in place. The greatest danger is that the Enron situation is not atypical of many aspects of many corporate organisations: those who closed their eyes to wrong doings (in Enron) were rewarded; others who sought to give warnings were punished; the win-at-all-costs mentality. The Enron lesson is that business is in the long term only going to survive by virtue of developing and following ethical behaviour. No one single error occurred just the compounding of many errors, all of which were preventable. It was based on a success at all cost culture where the ends always justified the means.

Enron is not explicable as just ethical and moral failure without examining why these failures occurred. Enron was a corporate product of both willingness to bend the rules and the opportunity to bend them. Others suggest that there are limited lessons to be learnt from the Enron story: that is to say Enron is bankrupt because of speculation and legal but unsound accounting and financing schemes. This view suggests that this proves that the free-market works; speculators and those at the margin of the market must suffer as and when the market turns. As such Enron investors were punished by the stock market for their poor judgment. The energy markets adjusted to Enron's collapse with few problems. As for the stock market crash, well, booms and busts are a natural part of a healthy capitalist economy.

A must have book for anyone who wants to know the inside story.

Other academic reading:

. Benston, G. J., and Hartgraves, A. L., 2002. Enron: what happened and what can we learn from it. Journal of Accounting and Public Policy, 21, 105-127.

Carson, T. L., 2003. Self-interest and business ethics: some lessons of the recent corporate scandals. Journal of Business Ethics, 43, 389-394.

Chatergee, S., 2003. Enron's incremental descent into bankruptcy: a strategic and organisational analysis. Long Range Planning 36, 133-149.

Cohan, J. A., 2002. "I didn't know" and "I was only doing my job": Has corporate governance careened out of control? A case study of Enron's information myopia. Journal of Business Ethics, 40, 275-299.

Currall, S., and Epstein, M. J., 2003. The Fragility of Organizational Trust: Lessons from the rise and fall of Enron. Organizational Dynamics, 32 (2), 193-206.

Desai, A. B. and Rittenberg, T., 1997. Global ethics: an integrative framework for MNEs. Journal of Business Ethics, 16, 791-800.

Sims, R. R. and Brinkman, J., 2003. Enron ethics (or: culture matters more than codes). Journal of Business Ethics 45, 243-245.

Spector, B., 2003. HRM at Enron: the unindited co-conspirator. Organizational Dynamics, 32 (2), 207-22.


Dr I Lavering
Adjunct Professor
MBT Program UNSW

Having read many newspaper and magazine accounts of the fall of Enron, including excellent coverage in The New York Times and BusinessWeek, this book really doesn't add much. It's a concise retelling of the events, so that's nice. But it imparts no greater understanding or context. Among the problems: The writing is bland. The book gives almost no explanation for Enron's rise before the calamitous fall. It never makes clear exactly why Enron had to go bankrupt. This account spends hardly any time on Arthur Andersen's role, even thought it led to that accounting firm's ruin. The authors also have an odd obsession with Michael Milken, even though he seems peripheral to the Enron story. If you've missed the news in the past seven months, this book can quickly give you the outline of the Enron saga. Otherwise, save your money.

Let me start by admitting that I lost a tidy sum of money in the whole Enron disaster and would be happy never to see that word again. Then I saw Richard Pachter's rave review of this book in the Miami Herald and figured that maybe I could learn something from reading it. I had no idea of some of the things that Enron up to (criminal problems as far back as the 1980s) and the authors do an excellent job of fitting all the pieces together. I only wish that someone could for once write a book like this before disaster strikes.

The book was thrown together. The author wanted to be a first mover in the marketplace that analyzed what went wrong at Enron. However, the author neglected to mention in detail and explain how off balance sheet special purpose entities were Enron's demise. This is a waste of time and money to read.

The author makes a complicated area accessible to the general public in a careful, thoughtful way without distracting from the readibility; a masterful performance.