"They're still trying to hide the weenie," thought Sherron Watkins as she read a newspaper clipping about Enron two weeks before Christmas, 2001. . . It quoted [CFO] Jeff McMahon addressing the company's creditors and cautioning them against a rash judgment. "Don't assume that there is a smoking gun."
Sherron knew Enron well enough to know that the company was in extreme spin mode... Power Failure is the electrifying behind-the-scenes story of the collapse of Enron, the high-flying gas and energy company touted as the poster child of the New Economy that, in its hubris, had aspired to be "The World's Leading Company," and had briefly been the seventh largest corporation in America.
Written by prizewinning journalist Mimi Swartz, and substantially based on the never-before-published revelations of former Enron vice-president Sherron Watkins, as well as hundreds of other interviews,
Power Failure shows the human face beyond the greed, arrogance, and raw ambition that fueled the company's meteoric rise in the late 1990s. At the dawn of the new century, Ken Lay's and Jeff Skilling's faces graced the covers of business magazines, and Enron's money oiled the political machinery behind George W. Bush's election campaign. But as Wall Street analysts sang Enron's praises, and its stock spiraled dizzyingly into the stratosphere, the company's leaders were madly scrambling to manufacture illusory profits, hide its ballooning debt, and bully Wall Street into buying its fictional accounting and off-balance-sheet investment vehicles. The story of Enron's fall is a morality tale writ large, performed on a stage with an unforgettable array of props and side plots, from parking lots overflowing with Boxsters and BMWs to hot-house office affairs and executive tantrums.
Among the cast of characters Mimi Swartz and Sherron Watkins observe with shrewd Texas eyes and an insider's perspective are: CEO Ken Lay, Enron's "outside face," who was more interested in playing diplomat and paving the road to a political career than in managing Enron's high-testosterone, anything-goes culture; Jeff Skilling, the mastermind behind Enron's mercenary trading culture, who transformed himself from a nerdy executive into the personification of millennial cool; Rebecca Mark, the savvy and seductive head of Enron's international division, who was Skilling's sole rival to take over the company; and Andy Fastow, whose childish pranks early in his career gave way to something far more destructive. Desperate to be a player in Enron's deal-making, trader-oriented culture, Fastow transformed Enron's finance department into a "profit center," creating a honeycomb of financial entities to bolster Enron's "profits," while diverting tens of millions of dollars into his own pockets
An unprecedented chronicle of Enron's shocking collapse,
Power Failure should take its place alongside the classics of previous decades -
Barbarians at the Gate and
Liar's Poker - as one of the cautionary tales of our times.
MIMI SWARTZ is an executive editor at
Texas Monthly and won a National Magazine Award in the public interest category in 1996. She has been a staff writer for
The New Yorker and
Talk, and has written for the
New York Times,
Vanity Fair, and
Esquire. She lives in Houston with her husband and son.
SHERRON WATKINS is a former Arthur Andersen accountant who joined Enron in 1993, working for the man who later became CFO, Andy Fastow. She worked in Enron's finance group, its International company, and its Broadband division, before returning to work for Fastow as a vice president in corporate development. As a result of her memos to Ken Lay urging the company to change its accounting practices and restate its earnings, she has become known to the world as the Enron whistleblower. She testified before both the House and the Senate in hearings investigating Enron's business practices in February 2002, and was named along with two others as one of
Time magazine's 2002 Persons of the Year.
