14. Some details of the discussion between Tilney and Fastow are described in an April 18, 1998, memo from Tilney and Rick Gordon of Merrill to Herb Allison in the firm’s New York headquarters.
15. The telephone call from Allison was recorded on a call log that morning.
16. Copies of the Tilney faxes—from April 28, April 30, and May 4—were obtained by the author.
17. Some details of the Kopper and Fastow trip to England to visit with the executives of Greenwich NatWest from a copy of Kopper’s travel itinerary for May 17–20, 1998, and a May 15, 1998, memo issued by Kelly Boots to Fastow, “Greenwich NatWest Meeting.” Also see Fastow’s itinerary issued for the week of May 18, 1998.
18. Terms of Olson’s firing from an internal Merrill document, “Termination Authorization Form,” with a proposed firing date of June 1998. Also see a May 25, 1998, e-mail from Susan Preli of Merrill global research to Margot Leffler of the firm’s human-resources division regarding Olson’s termination. Finally, other details came from Olson’s May 22, 1998, e-mail, “Last Wednesday’s Events,” to Andrew Melnick of the research department. In his testimony before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations on Feb. 7, 2002, Olson alluded to, although he did not discuss explicitly, Enron’s efforts in his case and its attempts to reward analysts who spoke favorably of the company and punish those who did not.
19. Some details of the presentation to Lay were identical with those later presented on June 22, 1998, to the board of directors in the report “Project Trident: Creating a Global Water Company.”
20. The time and place of the Martin meeting with Skilling from an entry in Skilling’s schedule book.
21. A copy of the proposal presented to Skilling regarding the Elektro deal, “Project Hubcap Update,” was obtained by the author.
22. Some details of the July 14, 1998, executive committee meeting from the official minutes.
23. Some details of the auction for Elektro from “Elektro Auction Should Be Model for Integral Subsidiary,” Gazeta Mercantil Invest News, July 16, 1998; Geoff Dyer, “Elektro Stake Bids to Start at $744 Million,” Financial Times, 40; “Enron-Led Consortium Wins Elektro Auction,” Business News Americas, July 16, 1998; and Karen Santos, “Enron Buys into Utility in Brazil,” Houston Chronicle, July 17, 1998, Business section, 1.
24. Some details of the special meeting of the Enron board of directors held on July 21, 1998, from the official minutes. Also see the July 24, 1998, “Letter to All Employees” written by Lay and Skilling. The Marlin financing is described in a March 18, 1999, memo written by Roger Willard of Andersen for the Azurix Corp. and Atlantic Water Trust files, “Pushdown Requirements for Azurix and the Atlantic Water Trust.” Also see a series of e-mails between Bass and Stewart of Arthur Andersen, Aug. 7–8, 1998, e-mails between the two men of Aug. 13–14, 1998, as well as the Sept. 22, 1998, Andersen e-mail, with attachments, from Michael Patrick to Richard Petersen and John Stewart.
25. The efforts to work through the financing of Elektro are reflected in a 1998 memo from Bowen, copied to Fastow and McMahon, “Elektro—Debt Refinancing and Equity Syndication Action Plan.”
26. Timing of Olson’s dismissal from his official notice of termination.
27. McMahon testified about his efforts to bring in an outside person to manage an Enron equity fund in his appearance at hearings before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations on Feb. 7, 2002. He discussed certain specifics of his efforts to recruit Jakubik in his Jan. 21, 2002, interview with Wilmer, Cutler, which are reflected in the notes of that session.
28. Details of Levitt’s “numbers game” speech from a transcript and video of the event. He also described this speech in Take on the Street, 118–19.
29. Data about the performance of the Dow Jones Industrial Average from www.djindexes.com.
CHAPTER 8
1. These events occurred on September 11, 1998, seventeen days before the Levitt speech that closed Chapter Seven. However, for the sake of clarity and because the two closely set events are completely unrelated, I reversed the order of their presentation. This allowed for the chapter about Levitt to come full circle, and for the main arc of the Jakubik story to start in this chapter.
2. Details of the effects of Tropical Storm Frances from Eric Berger, “Frances Catches Area by Surprise,” Houston Chronicle, Sept. 12, 1998, A1.
3. Some details of the timing of these events from entries in Skilling’s schedule book for Sept. 11, 1998.
4. Some details of the audit committee meeting of Oct. 12 from the official minutes, the unofficial handwritten notes taken during the discussions by the corporate secretary, and a copy of the formal presentation made by Duncan and Causey.
5. Some details of the subsequent board meeting from the official minutes, the unofficial handwritten notes taken during the discussions by the corporate secretary, and a copy of the formal presentation made by Skilling.
6. Details of the guarantee authority granted to Fastow from a copy of the resolutions presented to the board on the morning of Oct. 13.
7. Timing of the meeting with the Chase bankers from entries in Skilling’s official schedule as well as an Oct. 21, 1998, memo to Fastow and Skilling from Kelly Boots regarding the meeting. Also see the Oct. 23, 1998, memo from Rick Walker of Chase to Jimmy Lee regarding the upcoming meeting with Fastow and Skilling.
8. Details of Fastow’s travels from a series of Sept. 29 memos from Kelly Boots, laying out his meetings with Banco Bilbao Vizcaya in Madrid; Société Générale and Crédit Lyonnais in Paris; Greenwich NatWest and Barclays in London; Banco Nazionale del Lavoro in Rome; and several others.
9. Serice described portions of the meeting and the subsequent encounter with Lyness in an e-mail the following day, dated Nov. 4, 1998, and addressed to Rick Walker of Chase, among others.
10. Much of this argument came to be voiced at a board meeting on Aug. 7, 2000, as Enron was attempting to decide what to do with billions of dollars the company, incorrectly, expected to be arriving soon. The argument was presented in the paperwork handed out for the meeting of the audit and compliance committee.
11. Some details of the discussions between Hannon and Rice from a transcript of Hannon’s testimony before the Securities and Exchange Commission on Jan. 4, 2002.
12. Some details of Enron’s move into broadband, its purchase of Modulus, and the challenges it faced from the FBI 302 from the interview of Rex Shelby, dated Aug. 15, 2002. Also see the Modulus document “Creating a Unique Advantage in Distributed Computing,” April 1998; the Jan. 1999 internal Enron document “Q&A: Enron Communications”; and the sworn testimony of Kevin Hannon before the SEC on Jan. 4, 2002.
13. Timing of this meeting was established through entries in Skilling’s schedule book.
14. Some details of McMahon’s discussion with Brown and his subsequent meeting with Fastow from the Wilmer, Cutler notes of his Jan. 21, 2002, interview.
15. Details of the wire-transfer authorization from the original document. Details of Kopper’s checks to Fastow from the superseding indictment in U.S. v. Fastow et al.
16. Some details of the effort to obtain Fastow the CFO magazine recognition from unsigned notes about the idea, which appear to have been put together by members of the public-relations office.
17. Details of Franco’s efforts and statements from Mac Margolis and Michael Hirsh, “The Samba Effect,” Newsweek, Jan. 25, 1999, 34.
18. Details of the 1999 analyst conference from the summary report, “Analyst Conference, Houston, Texas, January 20–21, 1999,” including the attached agendas.
19. Some details of the board’s trip to India from Lay’s itinerary of that week, as well as packets of materials prepared for the board members.
20. Some details of the Azurix strategy from an undated document, “Azurix Private Placement Offering.”
21. Some details of this conversation from a March 16, 1999,
e-mail from Holloman to James Reilly of Citigroup.
22. A copy of the draft Enron Merchant Partners offering document was obtained by the author. The discussions between Merrill and Fastow are documented in a Dec. 3, 1998, internal Merrill memo from Schuyler Tilney to Dan Bayly, with the subject heading “Andy Fastow.”
CHAPTER 9
1. Details of the performance of Rhythms from a stock-price listing from that day. Data about the performance of the Dow Jones Industrial Average from www.djindexes.com. See also “Rhythms Netconnections Announced Sale of $250 Million,” Bloomberg Business News, Feb. 29, 2000.
2. The effort to develop hedges through the merchant-investment committee is disclosed in an April 8, 1999, e-mail from the Enron Capital & Trade Office of the Chairman to all ECT personnel, “Merchant Finance Organization Memo.”
3. Some details of Skilling’s meeting from entries in his schedule book for that day.
4. Details of the announcement about Enron Field from Mark Babineck, “New Astros Ballpark to Be Called Enron Field,” Associated Press, April 7, 1999. Also see the internal e-mail of that same day from Skilling and Lay to all Enron employees in Houston, “Enron and Astros Name New Ballpark ‘Enron Field.’ ”
5. Dialogue of Skilling’s discussions with analysts on April 13, 1999, from a transcript of the telephone call.
6. Details of Lay’s campaign contributions to Bush and Richards from Don Van Atta Jr., “Enron Spread Campaign Contributions on Both Sides of the Political Aisle,” New York Times, Jan. 21, 2002, 13.
7. A copy of the April 14, 1999 handwritten note from Bush to Lay was obtained by the author.
8. Some details of Fastow’s conversation with Skilling regarding the fund that would become LJM from the notes of Skilling’s Nov. 27, 2001, interview with Wilmer, Cutler and his confidential testimony before the SEC on Dec. 5, 2001. Timing of the events from entries in Skilling’s schedule book.
9. See the confidential testimony of Kevin Hannon, later of Enron Broadband Services, before the SEC on Jan. 4, 2002, and the FBI 302 of Shelby. The timing of this event from entries in Skilling’s schedule book.
10. Details of the AGOSBA bid and the initial analysis from “Enron Risk Assessment and Control Summary Approval Sheet” with “Deal Name: AGOSBA,” April 25, 1999. Also see the June 14, 1999, presentation to Azurix by Merrill Lynch, “Regarding North American Strategic Alternatives.”
11. Some details of Azurix’s successful bid for AGOSBA from the company’s 8-K filing with the SEC, July 7, 1999. Also see the Azurix 10-Q filing with the agency of Nov. 15, 1999.
12. Timing and location of the Skilling/Martin meeting from Skilling’s schedule book.
13. The direction of the communication—from Fastow to Howard, from Howard to his Greenwich colleagues—from the Batson Report, vol. 4, app. E, 37.
14. Fastow’s insistence on total secrecy and the name of the project, Martin, in part from contemporaneous documents presented to Greenwich and a May 26, 1999, e-mail from Bermingham to Howard, both of Greenwich. Also see David Duncan’s June 18, 1999, e-mail to John Stewart, along with attachments. Some details of the effort also from the Feb. 15, 2002, FBI 302 with Grutzmacher.
15. A copy of Bermingham’s May 28 e-mail was obtained by the author. Details of his suspicions from that e-mail, and one that preceded it on May 26.
16. Details of the e-mail communications between Neuhausen and Duncan from the original documents, May 28 and June 1, 1999.
17. Details of the efforts to set up a merchant-investing review group from a July 14, 1999, memo to members of Enron North America, a division of the wholesale group, from Cliff Baxter and Kevin Hannon.
18. A copy of the Lay letter to CFO magazine was obtained by the author.
19. The timing of the meeting between Fastow and Skilling from entries in Skilling’s schedule book. Some details of the meeting from Skilling’s Dec. 4, 2001, testimony before the SEC.
20. Timing and location of the Skilling/Rice meeting from Skilling’s schedule book.
21. Some details of Shelby’s thoughts and opinions about Enron’s broadband effort from the 302 of his FBI interview on Aug. 15, 2002. Also see the undated presentation “Enron Communications,” which was subsequently distributed throughout the company on July 27, 1999.
22. Some details of Jeffe’s conversation with Fastow from the Batson Report, vol. 4, app. F, 39–40.
23. Details of the events surrounding the Nordstrom offering from “Nordstrom Gets a Leg Up with a Move to Big Board,” Seattle Post-Intelligencer, June 10, 1999, F4. The offering price of Azurix from the company’s press release; its daily performance and closing price from Adam Jones, “Azurix Makes a Modest Debut,” Times (London), June 11, 1999.
24. The timing of these events involving Kaminski has been incorrectly cited in numerous official reports. Repeatedly, the reports declare that they began on June 2; however, in each instance, the reports cite the Wilmer, Cutler notes from a Dec. 19, 2001, interview with Kaminski as its source. The eight-day discrepancy is significant: the timeline laid out by Kaminski in his Wilmer, Cutler interview would suggest that Buy’s later protestations that the deal was too far along to stop were false. However, a review of Kaminski’s actual schedule, as well as the schedule of outside meetings he attended that played a role in the way these events unfolded, demonstrates conclusively that these discussions began on June 10, and that Buy’s subsequent statements were correct. The author has independently confirmed this conclusion that was based on a review of the documents.
25. Some details of Kaminski’s efforts to understand LJM and price the options from his Dec. 19, 2001, Wilmer, Cutler interview. Also see the Batson Report, vol. 4, app. D, 62–63; Skilling’s testimony before the SEC on Dec. 4, 2001; and the Wilmer, Cutler notes from the Dec. 28, 2001, interview with Vasant Shanbhogue.
26. Timing of the meeting from an entry in Lay’s personal schedule.
27. Some details of the meeting with Lay from a copy of the PowerPoint presentation; Skilling’s testimony before the SEC on Dec. 4, 2001; and the Wilmer, Cutler notes from the Jan. 11, 2002, interview with Mordaunt, who was also in the room at the time. Also see the Wilmer, Cutler notes from the Jan. 16, 2002, interview with Lay and the Batson Report, vol. 4, app. D, 63.
28. Some details of Kaminski’s discussions with Buy from his Dec. 19, 2001, Wilmer, Cutler interview. Also see the Batson Report, vol. 4, app. D, 62–63.
29. A copy of the Ellison e-mail was obtained by the author.
30. Details of the controversy within CSFB from the Batson Report, vol. 4, app. F, 40–41, 45–46.
31. Details of the LJM papers in the Cayman Islands from the original documents on file in the office of the Registrar of Limited Partnerships.
32. Some details of Castleman’s discussion with Glisan from the notes of his Dec. 6, 2001, interview with Wilmer, Cutler.
33. Some details of Kaminski’s discussions with Buy from his Dec. 19, 2001, Wilmer, Cutler interview. Also see the Batson Report, vol. 4, app. D, 62–63.
34. Details of Gramm’s experience from her sworn statement of Aug. 20, 2003, to a lawyer from Alston & Bird, Neal Batson’s law firm.
35. Some details of the June 28, 1999, board meeting from the official minutes, the unofficial handwritten notes taken by the corporate secretary, and the PowerPoint presentation “Project LJM Board Presentation.”
36. Some details of the Kaminski discussion from his sworn statement of May 9, 2003, to a lawyer from Alston & Bird. See also notes of his Dec. 19, 2001, Wilmer, Cutler interview.
CHAPTER 10
1. Baxter expressed his frustration with Skilling’s approach to Fastow in his interview with Wilmer, Cutler on Jan. 10, 2002.
2. Details of the management committee meeting from agenda documents prepared for it. A copy of the Fastow/McMahon presentation was obtained by the author. Also see the Batson Report, vol. 3, 15–16.
3. The mismatch in the performance of the hedge is described in a memo to the file by
Beth Lehman from the SEC, dated Jan. 17, 2002. The memo describes statements by David Duncan taken from his interview three days earlier in case number H0–9350, In the Matter of Enron Corp. Some details of the LJM structure from the June 30, 1999, letter, with attachments, from Enron Corp. to LJM Cayman LP and LJM Swap Sub LP. The attachments include the amended and restated limited-recourse promissory note of fourteen million dollars, dated June 30. Also see the confirmation pages for the equity-option transaction, sent by fax to LJM Swap Sub from Enron and on that same day, and notes of Kaminski’s Dec. 16, 2001, interview with Wilmer, Cutler.
4. Some details of the lunch between the Enron engagement accountants and Goolsby from the 302 of the FBI’s Feb. 8, 2002, interview of Cash, as well as the 302 of the bureau’s interview with Goolsby on Feb. 28, 2002.
5. Some details of Kopper’s presentation on Lipshutz and Glisan from their employment reviews from that period.
6. Some details of the British water announcement from Michael Harrison, “Byatt Faces Water Challenge,” Independent, July 28, 1999, Business, 17.
7. Some details of the Aug. 5 meeting from the CSFB document “Materials Prepared for Discussion: LJM Caymans L.P., August 5, 1999.” Other details from an Aug. 6 e-mail from Bermingham to Howard describing the previous day’s meeting. Also see the Batson Report, vol. 4, app. E, 48–51, and app. F, 50–52.
8. Some details of the Banham interviews from notes taken during the phone calls. Also see Russ Banham, “Andrew S. Fastow—Enron Corp.,” CFO magazine, Oct. 1, 1999.
9. Fastow’s demand for the semiannual management fee from a letter he wrote, Aug. 12, 1999. Also see the wire-transfer request of Aug. 11, 1999.
10. Some details of the Cuiabá discussions from Wilmer, Cutler’s notes from the Dec. 6, 2001, interview with Castleman; the Dec. 5 and 7, 2001, interviews with Lipshutz; and the notes of the Dec. 21, 2001, interview with Causey. Also see Castleman’s memo for the file, “Sale of EPE Equity Interest to LJM,” Sept. 30, 1999.
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