Visionary's Dream Led to Risky Business

Duncan responded: "I really couldn't agree more."

But Duncan did not try to oppose the deal. In his e-mail to Neuhausen, Duncan wrote that Andersen would go along if Lay and Enron's 18-member board of directors approved the arrangement.

In a one-hour teleconference on June 28, 1999, that included five other items of business, the board approved the LJM proposal presented by Lay, Skilling and Fastow. It also gave Fastow permission to work simultaneously for LJM and Enron, despite the conflict of interest.

"I couldn't stop it," Buy told Kaminski. Kaminski wondered how hard he had tried.

Paraphrasing Winston Churchill's rebuke of Neville Chamberlain's appeasement of Hitler, Kaminski told a colleague that Buy had chosen shame over confrontation. The confrontation would come, Kaminski predicted.

Several days later, Kaminski was sitting in his office when the phone rang, according to one executive's account. It was Skilling, saying Kaminski was being transferred out of Buy's risk-management division because he was acting like a cop, trying to kill deals. People did not like it.

A Patriarchal Visionary

To understand Enron's fate, it helps to start with its beginnings.

In June 1984, when Ken Lay became chairman and chief operating officer of Enron's precursor, Houston Natural Gas, the firm's finances were a lot simpler. It was just a pipeline company. Lay quickly doubled its size by acquiring a Florida pipeline company.

But Lay's dreams were bigger still. Pipelines were profitable, and Lay wanted to create the largest pipeline system in the nation. The next year, Lay's firm merged with InterNorth Inc. Together, they owned about 40,000 miles of pipeline.

The company changed its name to Enron in 1986. It was just the beginning. Lay, its patriarchal visionary, was determined to create one of the biggest, most successful companies in the world.

With an ideological fervor for deregulation and a knack for winning influential friends, Lay campaigned for changes in federal energy rules that would allow natural gas to be sold on open markets like wheat or pork bellies. In doing so, he helped create an industry and made Enron a corporate political powerhouse.

In 1990, Lay hired the 36-year-old Skilling, a brilliant Harvard MBA who was a longtime Enron consultant, to pioneer the company's energy-trading operations. Skilling created the "gas bank," making Enron the first company to buy large volumes of gas from producers and resell it to industrial customers on long-term contracts. That stabilized the U.S. gas market, expanded gas production nationwide and fueled the phenomenal growth that Enron reported during the decade.