Rating: 
Summary: Great reporting by Robert Bryce
Review: The victory of Pipe Dreams lies in its readability. As US prosecutors have explained in their dogged attempts to nail down a case against Ken Lay and Jeff Skilling, "If WorldCom was arithmetic, then Enron is advanced calculus." Despite the inherent complexity of Enron's downfall (derivatives, SPEs, mark-to-market accounting, and 'pre-paids' all figure heavily here), Robert Bryce tells a compelling, gripping tale. Bryce's reporting mixes the personalities (all the main ones are covered here - Skilling, Lay, Rebecca Mark, Ken Rice, Lou Pai, Andy Fastow, Michael Kopper, etc.) and the financial details. Bryce's mastery is he gives you a flavor for shady dealings like Fastow-created partnerships such as the now notorious LJM1 and LJM2. He explains their intent, references a chart that speaks to their inherent complexity, winks at the reader (hey, he says, obfuscation was the point here), and then points to their fatal flaws (e.g., Fastow sitting on both sides of the table, financial solvency based upon a constantly-rising stock price, etc.) Bryce is a reporter that can interweave facts like that with delicious stories of Rebecca Mark's high dollar globetrotting, replete with obscene private plane trips - often flying her, alone, to far-flung locales - and wonderfully evocative stories of her making speeches to water works executives...and dramatically flinging off her full-length sable coat as she ascends to the stage. Well, any hack writer can't pull that off. Pipe Dreams is a combination of good old-fashioned reporting (200+ interviews) and great writing chops. In short, it's a great read.
Rating:
Summary: Great reporting by Robert Bryce
Review: The victory of Pipe Dreams lies in its readability. As US prosecutors have explained in their dogged attempts to nail down a case against Ken Lay and Jeff Skilling, "If WorldCom was arithmetic, then Enron is advanced calculus." Despite the inherent complexity of Enron's downfall (derivatives, SPEs, mark-to-market accounting, and 'pre-paids' all figure heavily here), Robert Bryce tells a compelling, gripping tale. Bryce's reporting mixes the personalities (all the main ones are covered here - Skilling, Lay, Rebecca Mark, Ken Rice, Lou Pai, Andy Fastow, Michael Kopper, etc.) and the financial details. Bryce's mastery is he gives you a flavor for shady dealings like Fastow-created partnerships such as the now notorious LJM1 and LJM2. He explains their intent, references a chart that speaks to their inherent complexity, winks at the reader (hey, he says, obfuscation was the point here), and then points to their fatal flaws (e.g., Fastow sitting on both sides of the table, financial solvency based upon a constantly-rising stock price, etc.) Bryce is a reporter that can interweave facts like that with delicious stories of Rebecca Mark's high dollar globetrotting, replete with obscene private plane trips - often flying her, alone, to far-flung locales - and wonderfully evocative stories of her making speeches to water works executives...and dramatically flinging off her full-length sable coat as she ascends to the stage. Well, any hack writer can't pull that off. Pipe Dreams is a combination of good old-fashioned reporting (200+ interviews) and great writing chops. In short, it's a great read.
Rating:
Summary: HOW TO FAIL IN BUSINESS WITHOUT REALLY TRYING
Review: This is a very readable account. The text opens stating, "My premise throughout this book is that Enron's failure wasn't due to faulty accounting or poor regulation.... Rather it failed because key leaders at Enron lost their moral/ethical direction at the same time that the company was making multibillion-dollar bets on fatally flawed projects." The author asks" Why did a seventy-six year old pipeline company with rock-solid cash flow and reliable earnings suddenly flame out in a maelstrom of accounting irregularities, fraud and skullduggery." After a brief three-chapter history of Enron, the author develops his thesis that "Enron failed because its leadership was morally, ethically and financially corrupt," showing how deal-focused management took one of the most profitable companies in Houston into bankruptcy. The author, Robert Bryce, a Texas investigative journalist, interviewed over 200 individuals, and researched countless documents, including nineteen SEC filings for this book. The text discusses the major players in the context of their work, their abilities, Houston society and their work-place relationships. Many former Enron people blamed Ken Lay stating ".... he flat couldn't judge people and said he became blinded to other people's faults. One Executive said Lay 'never understood that the pipelines that are paid for and power and processing plants that are mostly paid for, were the way to make money." The harshest accounts concern Jeff Skilling and Andy Fastow. Skilling, who became president in 1997, was called by one executive" the smartest son of a bitch I've ever met." However, "Skilling was not a manager, he was a deal maker. Exotic financing schemes and the deals that came with them excited Skilling." The text notes, " When it came to strategy and starting businesses, Jeff Skilling was a genius. When it came to understanding the importance of cash, he was dumber than a box of hammers." Skilling conceived the idea of a Gas Bank where gas producers were "depositors" in an imaginary bank while gas consumers were the "borrowers." The Gas Bank was a turning point for Enron and made money. However, Skilling felt that accrual accounting was inadequate and changed to mark-to-market accounting for gas trading. Revenue growth then became more important than cash, which eventually put Enron in a cash crisis, giving birth to off-balance-sheet accounts. Enron started down a slippery ethical slope and no one in authority seemed to care. Bryce states CFO Andy Fastow was not suited for his job. He knew how to set up dozens of off-balance-sheet entities, but he didn't understand the company's overall finances. "Fastow's special-purpose entities became a fast-and-dirty way for Enron to manufacture additional revenues in a big hurry. Fastow's off-the-balance sheet entities gave Enron the ability to do deals quickly." The book notes that making deals was enormously profitable to the managers who conceived the deals because these managers were paid fabulous bonuses when the deals were signed, rather than when the project was successful. Frank Wing's Teeside power deal in Britain was "colossal blunder"; he was nevertheless handsomely rewarded. In like manner, Rebecca Mark initiated a power plant project in India where there was no need and where historically 30 percent or more of the plant's output would simply disappear. The project paid her big bonuses plus Enron pardoned loans to her, which they did for many top executives, in excess of $1.6 million. Using off-balance-sheet entities, Mark next formed Azurix putting Enron in the water utilities world market. Through poor planning and extravagant spending Azurix was soon in cash extremis. The author states ".... there is no question that the enormous losses Enron took on Mark's projects accelerated the company's downfall." From 1990 through 1996, Enron had a competent/effective president, Rich Kinder. Kinder's obsessions were cash and cash flow and under Kinder's management Enron grew steadily. Unfortunately, Kinder repeated Ken Lay's mistakes by sleeping with Lay's secretary. Lay was worried what his secretary may reveal to Kinder, and informed Kinder he would not be made CEO. Kinder resigned. The author states "Giving Kinder his walking papers would prove to be the single worst decision Ken Lay made in his career." Jeff Skilling replaced Kinder and Enron's fate was sealed. While they experienced cash shortages, Enron ignored expense control. Besides uncontrolled operating expenses there were many costly non-operating expenses. Enron's air fleet was a much-abused extravagance. In 2000 alone, Ken Lay's personal usage of Enron airplanes was estimated at $334,179. Amazingly just eighteen months before bankruptcy, Andy Fastow was the driving force behind an art-buying binge for Enron; and when Enron was just weeks from bankruptcy, art buying was accelerating. The text gives a good account of Enron's final dive into failure. Criticism was not tolerated from outside analysts or by internal sources. The Board of Directors did virtually nothing to solve the cash problem for their annual $87,000 a year in cash and stock options. By year 2000 Enron had granted over 93.5 million shares of stock. As disaster approached, Skilling, Fastow, Mark and other senior executives began bailing out by cashing their stock options. Most employees didn't have the information or opportunity to follow suit. Skilling resigned in August 2001 and Fastow left on leave of absence in October. It was now up to Ken Lay to save the company. Unfortunately, Lay didn't know what to do about Enron's $18 billion in liabilities. One sources observed, "Lay didn't have a clue. He was like a deer in the headlights." The only solution was a merger. The only merger candidate, Dynegy Inc., terminated talks because of "questions about Enron's cash position." Next, Standard & Poors slashed Enron's credit rating to junk status. On December 2, 2001 Enron filed for bankruptcy. Still without a clue, "Ken Lay made sure to keep blaming someone else. Along with the bankruptcy papers, Enron filed a $10 billion lawsuit against Dynergy, claiming breach of contract." In conclusion, as one analyst stated, "Pigs get fat, hogs get slaughtered"; this best summarizes the results of Enron's greed and arrogance.
Rating:
Summary: Ha! You just think you know the story of Enron,Inc.
Review: We could ask the question a million times, how did the number 7 company in America go bankrupt in a matter a few years? A corporate debacle of this magnitude needed to be explained and reasoned over...and Robert Bryce got the job done with his new book! Bryce's superb investigative style and sharp writing become wonderfully apparent as you "gasp" from chapter to chapter on the moral hijinks and financial mayhem that are now synonymous with Enron-USA. More importantly, Bryce manages to bring his story full circle in explaining the numerous ties that Enron had to other major corporations and key political machines, all of which played a part in and benefited from Enron's demise. You think you know what happened, but you won't really know until you read this book once, twice, and three times. Bryce's book should be required reading for today's business student, company executive or aspiring stock investor! We can only hope that Robert investigates Tyco and WorldCom next.
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