CONSPIRACY OF FOOLS
A True Story
By Kurt Eichenwald. Broadway. 742 pp. $26
Conspiracy of Fools is a rollercoaster of a read whose style mirrors the wild ride of the Enron debacle it chronicles. The result is a dynamic blend of the inevitability of a Shakespearean tragedy and the cliff-hanging breathlessness of "The Perils of Pauline": You know what the terrible ending will be, but each time you must put the book down, you can't wait to get back to it to see what the next installment will bring.
Kurt Eichenwald, a New York Times reporter, presents a detailed and carefully researched chronology of the Enron story in short vignettes composed of short sentences that leave the reader's heart racing. The book barrels through the structuring of the childishly named special-purpose entities (JEDI, CHEWCO, BRAVEHEART), the manipulation of top investment banks, the feeding and entertainment of the board of directors, and the luxurious flights on the corporate jets (one of which carried former President Bush and his wife, Barbara, along with CEO Kenneth Lay, to George W.'s inauguration). Conspiracy of Fools vividly depicts the incompetence, arrogance and self-delusion of once-vaunted Enron executives who turned out to be hear-no-evil, see-no-evil, speak-no-evil dupes making bad business decisions and blindly following a diabolical Pied Piper's promises of wealth and fame to their own destruction -- and to the devastation of the many who depended on them.
Eichenwald makes the characters spring to life. Lay's behavior gives new meaning to the term "sleeping your way to the top." In contrast to the usual connotation of this phrase -- which at least implies some goal-oriented activity -- Enron's CEO appears to have dozed through years of whirlwind activity. Although Lay was often clueless as to what his company was doing, he rarely questioned, never challenged and seemed to feel that whatever Jeffrey Skilling and Andrew Fastow did was fine with him.
Jeffrey Skilling, Lay's successor, appears to have been severely psychologically damaged. That impression lasts throughout the book, in no small part because Eichenwald introduces him lying curled in the fetal position on a Miami hotel bed, drunk and sobbing.
But the most horrifying portrait is that of Fastow -- a modern-day Richard III who ruthlessly pursued what he desired and destroyed anyone who stood in his way. If you've ever wondered how evil can overpower institutions, read Eichenwald's descriptions of Fastow's manipulations of two major investment banks, Merrill Lynch and Salomon Smith Barney. In both cases, analysts had cut their ratings on Enron and failed to support the general hoopla in the financial community about the company. With surgical precision, Fastow cut each bank out of a hot investment opportunity, baldly stating, "Our decision here is intended to send you guys a message about how viscerally we feel." The message? Questioning Enron will cost you business. The two investment houses meekly fired the offending analysts, replaced them with Enron cheerleaders and waited for Fastow to pat their heads and feed them a treat. And he did. Merrill Lynch and Salomon Smith Barney could once again pour money into Fastow's financial schemes.
Eichenwald does not tell us how to prevent an Enron-like catastrophe from happening again. He calls the ultimate cause of the debacle "a nation's folly -- a folly that in time we are all but certain to see again." But his powerful story suggests a deep and compelling reason for the tragedy of Enron: the loss, by far too many of us, of the love for the work we do. Our corporations must have leaders who are not only, at a bare minimum, awake and alert and knowledgeable. Those leaders must also love the work they and their companies are engaged in, and they must care about the people whom that work affects.
The leaders of Enron were not excited by the businesses they were in. They didn't love the oil patch, the pipelines, the "boring" utility companies that brought warmth and light to ordinary people. They didn't care about the community of Dabhol, India, where they built a power plant. The people of California were not there to be served, only to be pawns in a clever chess match. And respect for employees? A comment at the performance review of a long-term employee who bought liability insurance for Enron says it all: "Buy insurance? A monkey could do that!" As Eichenwald makes grippingly clear, Enron's leaders were obsessed with the deals -- the deals that brought money and the good life (though by the end, even deal-making had lost its glitter). There was no pride in the job or joy in the work of the company.
Years ago, I interviewed the janitor of a graduate-student dormitory about his job. Monotonous, dirty, lonely were the words that I expected to hear. But no; this janitor said, "The people who live here, they depend on me. I can't let them down. And when I polish that floor, and it shines back at me, I know I've done a good job."
Eichenwald has masterfully depicted the devastating results of that lost love of purposeful work. He also has given us a fine example of what love of the job can produce: a dynamite book. Kurt Eichenwald clearly loves what he does. •
Barbara Ley Toffler, a former Harvard Business School professor, is the author of "Final Accounting: Ambition, Greed, and the Fall of Arthur Andersen."
