In the Enron disaster: a review of Kurt Eichenwald's Conspiracy of Fools: A True Story
Title: Conspiracy of Fools: A True Story
Author: Kurt Eichenwald
Publisher: Broadway Books (a division of Random House)
ISBN: 0767911784
How I came to the final of the 675 – the saga of Enron, described in Kurt Eichenwald Conspiracy of Fools: A True Story, I left shaking his head in disgust and shock at the time same time!
Award-winning journalist, Eichenwald, wrote in The New York Times, over seventeen years. Let the facts speakstory, Conspiracy of Fools: A True Story, based on the author of over a thousand hours of talk time, which held more than a hundred participants. Combing a thousand confidential business documents and government records of the time, diaries, and the best memories of participants, the author and relevant wonderful story about what happened to all of a credible dialogue.
It's hard to imagine how it was thatprestigious accounting firm Arthur Andersen & Co., perhaps only with a wink and accept the creative head of dubious accounting that were performed at Enron?
Although it is noted that Enron, in time, and before changing the rules of acceptable accounting standards for energy companies, legally authorized to use the sign "the market" accounting, which allows companies to count as income streams, hoping to capture profits in the future, the energy associated with their contracts. Itably used to request a review, major banks and foreign credit rating agencies.
Can we honestly believe that so-called "smart" businessmen like Ken Lay, chairman and CEO of Enron, and Jeff Skilling, its president, did not know whether or not related to fraud, the chief financial officer, Andrew Fastow?
Even at the end of her days at Enron, Fastov never explained the precise sound financial situation of the companywhich were the result of incompetence and venality.
Furthermore, not by the inability of Fastov, Enron has been tracking to know when your money shortages have been a prerequisite for knowing when and if they can pay their bills.
Apparently no one had any idea what the daily cash collateral posted by commercial partners and the amount returned from the company.
What is so remarkable is the paradoxical behavior of the mind Fastov. He can notunderstand the basic principles of business and finance 101, but he was smart in the Enron fraud of more than sixty million dollars of his mastermind of off-books partnerships that hid billions of dollars of debt and artificially increased the profit of the company.
While the price of Enron stock was alive and if found guilty, we all went for driving without digging too deep, and many questions. The old adage "you can not hearEvil, See No Evil ".
Eichenwald also be disclosed, as Enron was involved in several activities that have little in common with its main energy sector. As the author says, under the direction of Skilling, Enron has become radically different beast.
All this led to Enron contradictory strategies and loss of concentration, which at one end of the operation that resulted in huge profits with little money, which depended on Enronrating. On the other hand, had to consume large amounts of cash, while providing very little revenue for the years that could put their credit rating.
Furthermore, our CFO, Fastov, they have no idea how to calculate your return on investment!
One of them was a company that lied to investors, hiding the losses are made to look good, and executives who have been diverted company funds, all under the noses of his top officers.
This provision onlyWaiting for disaster!
To be fair, it should be noted that there are several leaders who are to some extent, do not complain about some creative accounting, is happening at Enron.
This is an excellent and fascinating read that chronicles the apparent multiple billion, which appeared in 2001.
One question, however, still lingers in my mind, like many Enron lurks in the shadows? Did you ever stop to this shameless behavior by some ofpublic companies? Just consider the wider effects of the innocent workers who not only lose his job, but in many cases, life savings and pension plans?
Only the way, Ken Lay was indicted and is facing allegations that security issues and fraud and misrepresentation. Jeff Skilling, facing the same day thirty and six counts, including fraud and insider trading. Fastov not admitted to two counts of wire and securities fraud and is currently servingTen-year sentence without parole. He agreed to cooperate with authorities. Stay tuned.