Conspiracy of Fools
Encyclopedia
Conspiracy of Fools is a book by Kurt Eichenwald
detailing the Enron
scandal. It was published in 2005 when Eichenwald was a business journalist with The New York Times
.
.
Eichenwald was assisted by a small staff of professional research assistants who helped him sort through the volumes of interviews, press reports and legal documents from the infamous corporate collapse.
Enron's Chief Financial Officer (CFO) Andrew Fastow
is depicted as voraciously greedy, using front corporations and partnerships, paying himself "management" and "consultant
" fees as if he were an outsider, and, in the process, cooking Enron's books to show fictitious profits. The book goes back to the 1980s to point out some questionable activities of Enron during that time, but the bulk of the book occurs from 1997 onward as the major events that led to Enron's collapse occur.
In addition to the story of Fastow, Eichenwald tells the stories of the complicity of Enron's accountants (at Arthur Andersen
), their lawyers (internal and external), the senior management (Kenneth Lay
and Jeffrey Skilling
), Fastow's partner in many of his deals, Michael Kopper, and Enron's board.
The picture that emerges of Enron is that of an out-of-control corporate culture that ignored the basic principles of business, allowing it to be manipulated by greedy incompetents for their own personal gain. The focus on reporting profits—rather than actually making money—created a situation that both encouraged and enabled a small group of insider criminals to "game the system." Enron's business losses were masked by accounting tricks, while the insiders raked off huge "profits" for themselves.
The game, Eichenwald reports, was eventually undone by huge losses, bad investments and the structure of the outside partnerships themselves, the solvency of which depended on ever-rising Enron stock prices. When Enron's stock began to fall, the financial structures imploded, leaving Enron with billions of dollars in losses and few assets.
Kurt Eichenwald
Kurt Alexander Eichenwald , an American writer and investigative reporter formerly with The New York Times and later with Condé Nast's business magazine, Portfolio...
detailing the Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
scandal. It was published in 2005 when Eichenwald was a business journalist with The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
.
Synopsis
Conspiracy of Fools tells the story of the 2001 collapse of EnronEnron scandal
The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world...
.
Eichenwald was assisted by a small staff of professional research assistants who helped him sort through the volumes of interviews, press reports and legal documents from the infamous corporate collapse.
Enron's Chief Financial Officer (CFO) Andrew Fastow
Andrew Fastow
Andrew Stuart Fastow was the chief financial officer of Enron Corporation that was based in Houston, Texas until the U.S. Securities and Exchange Commission opened an investigation into his and the company's conduct in 2001...
is depicted as voraciously greedy, using front corporations and partnerships, paying himself "management" and "consultant
Consultant
A consultant is a professional who provides professional or expert advice in a particular area such as management, accountancy, the environment, entertainment, technology, law , human resources, marketing, emergency management, food production, medicine, finance, life management, economics, public...
" fees as if he were an outsider, and, in the process, cooking Enron's books to show fictitious profits. The book goes back to the 1980s to point out some questionable activities of Enron during that time, but the bulk of the book occurs from 1997 onward as the major events that led to Enron's collapse occur.
In addition to the story of Fastow, Eichenwald tells the stories of the complicity of Enron's accountants (at Arthur Andersen
Arthur Andersen
Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations...
), their lawyers (internal and external), the senior management (Kenneth Lay
Kenneth Lay
Kenneth Lee "Ken" Lay was an American businessman, best known for his role in the widely reported corruption scandal that led to the downfall of Enron Corporation. Lay and Enron became synonymous with corporate abuse and accounting fraud when the scandal broke in 2001...
and Jeffrey Skilling
Jeffrey Skilling
Jeffrey Keith "Jeff" Skilling is the former president of Enron Corporation, headquartered in Houston, Texas. In 2006 he was convicted of multiple federal felony charges relating to Enron's financial collapse, and is currently serving a 24-year, four-month prison sentence at the Federal...
), Fastow's partner in many of his deals, Michael Kopper, and Enron's board.
The picture that emerges of Enron is that of an out-of-control corporate culture that ignored the basic principles of business, allowing it to be manipulated by greedy incompetents for their own personal gain. The focus on reporting profits—rather than actually making money—created a situation that both encouraged and enabled a small group of insider criminals to "game the system." Enron's business losses were masked by accounting tricks, while the insiders raked off huge "profits" for themselves.
The game, Eichenwald reports, was eventually undone by huge losses, bad investments and the structure of the outside partnerships themselves, the solvency of which depended on ever-rising Enron stock prices. When Enron's stock began to fall, the financial structures imploded, leaving Enron with billions of dollars in losses and few assets.
Related Books and Films
- The Corporation (2003) -- documentary filmDocumentary filmDocumentary films constitute a broad category of nonfictional motion pictures intended to document some aspect of reality, primarily for the purposes of instruction or maintaining a historical record...
about the concept of the corporation - Enron: The Smartest Guys in the RoomEnron: The Smartest Guys in the RoomEnron: The Smartest Guys in the Room is a 2005 documentary film based on the best-selling 2003 book of the same name by Fortune reporters Bethany McLean and Peter Elkind, a study of one of the largest business scandals in American history...
(2005) -- film depicting the rise and fall of Enron, based on the book Smartest Guys in the Room (2003) by Bethany McLeanBethany McLeanBethany McLean is a contributing editor to Vanity Fair magazine, and known for her work on the Enron scandal and the 2008 financial crisis...
and Peter Elkind