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Allan Sloan

Enron Book Reads More Like Notes Than a Finished Story

By Allan Sloan
Tuesday, March 22, 2005; Page E03

"Conspiracy of Fools," the new Enron book by New York Times reporter Kurt Eichenwald, is the hottest and most heavily promoted book about business that we've seen in years. It's even hotter than Jim Stewart's "DisneyWar," which unlike this book is about a subject -- the Walt Disney Co. -- that you don't need a master's degree in business to understand.

"Conspiracy" has been excerpted in two consecutive issues of the Sunday New York Times, a rare honor. It's been reviewed almost everywhere, and its author has been all over TV, including "60 Minutes" and "NewsHour with Jim Lehrer." Turn on a TV at any hour, and you may see Eichenwald smiling out at you.

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But despite the hype, the excerpts and more than 700 pages between its covers, "Conspiracy of Fools" isn't really a book about Enron. In fact, I'd argue that it's not really a book at all -- at least not a business book. Rather, it's a long, long, long memo -- 675 pages, plus 41 more pages of source notes -- from one of our nation's leading investigative reporters, not a finished work. You can't just read it; you need to treat it as a guide to further study.

You expect a business book not only to tell you what happened, but to explain why it happened. You expect it to translate complicated transactions into a language approaching English and put them into context, so that a general reader can figure out what's going on and why he should care. At least that's what I think a business book should do, given that most people don't understand this stuff or care about it.

But this book doesn't do that. Instead, it lays out, in breathless prose, page after page of anecdotes, reconstructed conversations and Eichenwald's thoughts about what the players in the Enron game were thinking. Eichenwald doesn't explain what's wrong with what chief executive Ken Lay and most of the other players were doing. So your initial reaction -- at least my initial reaction -- is that he's portraying Lay and his colleagues as mere fools. Not guilty of anything, just fools. In reality, though, he's probably not doing that.

How can I tell? Because I have material nonpublic information about the way Eichenwald works and thinks, thanks to having become friendly with him since I reviewed his earlier book for the Times five years ago. You should also know that I'm a party at interest here, because I covered Enron for Newsweek. Finally, Eichenwald and I have squabbled for two years about what I consider his too-sympathetic Times coverage of Lay, on whom this book is focused. I think Eichenwald has fallen into the trap of empathizing with his subjects as the result of gaining access to them. He thinks I'm overly judgmental.

The book opens with what Eichenwald thinks was running through Lay's head on Oct. 24, 2001, following the date that lies at the heart of the government's case against him. (It's scheduled for trial next year, which is why Lay and his handlers have been on a charm offensive, including buying ads on Google, Yahoo and MSN so the first choice offered to anyone who asks about "Ken Lay" is kenlayinfo.com, his propaganda vehicle.)

There's no mention of Lay's increasingly desperate personal financial situation at the time, or Enron's plunging stock price, or that a month earlier Lay had told Enron's employees the stock was an incredible buy without mentioning that he'd sold millions of dollars of stock to Enron itself in transactions that hadn't yet been disclosed.

Eichenwald excoriates former Enron chief financial officer Andrew Fastow throughout the book, calling him a thief who stripped Enron of money with a variety of self-dealing transactions. (Fastow has pleaded guilty to felonies and is expected to be a witness in Lay's trial early next year.) Eichenwald doesn't mention that Lay's stock sales to Enron took $70 million of cash out of the stricken company -- more than Fastow did.

But when I decided to channel Eichenwald by treating "Conspiracy" as a memo rather than a book, I began to realize that much of the book can be read as ambiguous rather than exculpatory. Take the title, "Conspiracy of Fools." Fools are dupes -- but a conspiracy is an illegal act. Either people were fools rather than felons, or they were conspirators combining to perform illegal acts. Take your pick.

"Conspiracy" is being marketed as a crime novel -- and was edited as one, presumably to reach a broader audience than a business book would. That's where the problem lies, I think. I don't begrudge Eichenwald or his publishers at Random House commercial success -- heck, I write because I get paid, not as a public charity -- but there's a huge difference between a crime novel and a business book.

A crime novel's story is the entire point of the enterprise. Read a Spenser or Alex Delaware book, and what you read is all there is. The story that Eichenwald tells, however, is only a taking-off point for understanding Enron. But you have no way to know that.

Let's take the biggest issue: Lay's responsibility for Enron's activities, which not only hurt investors and employees but also cost California electricity users big bucks and damaged outfits ranging from British water companies to a New Jersey newsprint plant. Eichenwald doesn't attribute any blame directly to Lay. But if you pull together the examples of foolishness and incompetence scattered throughout the book and attribute them to the people whom Lay promoted, then you blame Lay for what happened. But who's going to do all that work?

People sometimes criticize modern-day journalists, including me, for being too judgmental in our coverage. But "Conspiracy of Fools," I'm afraid, is an example of how expressing no opinion can be far more misleading to readers than expressing too much.

Sloan is Newsweek's Wall Street editor. His e-mail address is sloan@panix.com.

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