THE SMARTEST GUYS IN THE ROOM
THE AMAZING RISE AND SCANDALOUS FALL OF ENRON.
By Bethany McLean and Peter Elkind
$26.95 Portfolio (US)
Until the spring of 2001, Enron epitomised the triumph of the new economy. Feared by rivals, worshipped by investors, Enron seemingly could do no wrong. Its profits rose every year. Its stock price surged ever upwards. Its leaders were hailed as heroes.
Then a young writer, Bethany McLean, wrote an article, 'Is Enron Overpriced' (published in Fortune magazine) that asked a simple question--how, exactly, does Enron make its money?--and the house of cards began to collapse.
Within a year, Enron was facing humiliation and bankruptcy. Though other business scandals were to follow, none has had the shattering effect of Enron's bankruptcy, which was the largest in US business history. Enron's collapse caused Americans to loose faith with a system that rewarded insiders with millions of dollars while small investors lost everything. It was swiftly revealed that Enron's success was an illusion, fuelled by billions of dollars in transactions and off-balance sheet deals that stretched accounting rules and gave the impression that Enron was a healthy, fast-growing company.
It was an illusion that Wall Street was willing to accept even though many on Wall Street knew the truth.
This book reveals that Enron was run by executives whose greed knew no bounds. Drunk on their own success, they were so certain of their brilliance that they believed that they could fool the world. These executives included Ken Lay--the genial but clueless CEO who revelled in the trappings of his office but ducked responsibility. From the earliest days, Lay's weakness allowed greedy lieutenants to run amok.
Africa, or more particularly Nigeria, entered the picture when Enron cooked up a deal to solve a familiar problem--how to capitalise on assets it...