The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron
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natural-gas analysts, 232
Natural Gas Clearinghouse, 105, 391
natural-gas contracts, 38, 56
long-term, 66, 103
trading of, 36–37, 39
natural-gas industry, 6, 8, 9, 10, 11–12, 27–28, 33, 36, 40, 58, 59, 60, 85,
119
NatWest, 194–96, 203, 365, 384, 412
NCAA, 215
nCube, 293–95
Neuhausen, Benjamin, 190
Nevada, 268
new economy, 230, 244, 348
Newfield Exploration, 402
New Hampshire, 174
New Jersey, 8, 46
New Jersey Board of Education, 134
New Power Company, 302, 309, 316, 362, 369, 399
New York, N.Y., 8, 293, 418
New Yorker, The, 231
New York Mercantile Exchange (NYMEX), 16, 38, 40, 62, 223
New York Post, 423
New York Stock Exchange, 222, 394–95
New York Times, 83, 90, 166, 240, 313, 343–44, 386, 416, 428
NFL, 298, 343, 344, 392
Nigeria, 208, 209, 412, 419
Niles, Ray, xvii, 244, 259
Nixon, Richard M., 2, 6
Northern Natural pipeline system, 11, 387, 395, 403
North Sea, 22, 49, 50, 103
NSM, 130
NYMEX (New York Mercantile Exchange), 16, 38, 40, 62, 223
Obema, Barack, 427
Occidental Petroleum, 109
Ocean Spray, 178
Odom, Michael, 381–82
off-balance-sheet debt, 154, 155, 158, 169, 230–32, 238, 250, 293, 322, 341, 384
off-balance-sheet vehicles, 132, 133, 149, 151, 153, 155, 168, 171, 182, 237, 249, 261, 263, 346, 388, 393, 396, 400
offshore entities, 159, 160
Off Wall Street Consulting, 330
Ogilvy & Mather, 174
Ohio, 174
oil, 1, 33, 34, 36, 38, 88, 131, 159, 240
oil boom, 135
oil companies, 2, 49, 137
oil-futures contracts, 36
oil trading, 15–26, 225
Oklahoma State, 280, 392
Olson, Cindy, xv, 242, 356–58, 360
Olson, John, xvii, 180, 234–35, 375
Omaha, Nebr., 11–13
O’Neill, Paul, 385
Ontario Teachers’ Pension Plan, 176
Open Heart Open, 146
optionality, 322–23
Oracle, 293
Oregon, 107, 108
Oregon Public Utility Commission, 107–8
Osprey, 156, 165, 249, 380, 416
Overseas Private Investment Corporation (OPIC), 74, 81, 88–89
Owens Corning, 178, 181, 182
Pacific Gas & Electric, 265, 272, 277–79, 300–301, 335
Pai, Lou Lung, xv, 43, 57–60, 62, 101, 105, 107, 122, 138, 215, 309, 332–33, 337, 345, 351, 389, 390, 411
Baxter’s problems with, 65, 66, 228, 302
Burns undermined by, 69
character and personality of, 58, 59
cheating by, 62–63
departure of, 334, 349, 397
divorce and remarriage of, 301–2
at EES, 171, 175, 180–82, 184, 213, 300–302, 304
at Enron Xcelerator, 302, 334
Pai, Lou Lung (cont.)
EOL originated by, 222
stock sales by, 334
strippers as fascination of, 57, 58–59, 301
PaineWebber, 85, 292, 343
Palmer, Mark, xv, 322–23, 326, 339, 346–47, 349, 364, 371, 377
paper and pulp trading, 110, 225, 290, 388, 396
Parla, Steven, 244
Patagonia, 122
Patel, Trushar, 197
Pay N Go (horse), 302
Pellechia, Ralph, 238, 323
Pelli, Cesar, 239, 378
Penn Square scandal, 135
Pennsylvania, 174
Pennzoil, 1
pension funds, 236
Pentagon, 5, 7, 51, 363
People’s Gas & Electric of Chicago, 219
Pepsi, 176
Peru, 14, 254, 375
Peterborough, N.H., 174, 177
Petrocelli, Dan, 417, 418–20, 423
Petropol, 18, 19, 21, 24
phantom equity, 35
Philippines, 74, 77
Phillips Petroleum, 51, 103–4
Photofete, 421
pipeline industry, 6, 7, 9, 10, 11, 25, 27, 33, 56, 137
pipelines, 2, 38, 47, 49, 50, 69–70, 73–76, 85, 98, 105, 108, 228, 230, 283, 286, 369, 379, 387, 409
pipeline systems, 8, 110
Points of Light, 301
Poland, 203, 259
Porcupine, 309, 316
Portland, Ore., 293
Portland General, 107, 110, 166, 185, 260, 264, 270, 316, 366, 409
Portland World Trade Center, 268
Powell, Colin, 51, 240
Power Failure (Swartz and Watkins), 358
power generation and transmission, 271
power plant developers, 60
power plants, 38, 70, 74, 76, 111, 271, 273, 282–83, 339, 409
power traders, trading, 106, 171, 224, 243, 283, 339, 396, 397
North American, 226–27, 282, 339–40
Prather, Phil, 5
Prebble, Lucy, 426
prepays, 159, 160, 161, 237, 388
price-to-earnings ratio, 229, 323
PricewaterhouseCoopers, 148, 193, 237, 311, 334
Prince’s Trust, 48
private equity investments, 127, 130–31, 251, 390
privatization, 48, 74, 258
on military bases, 178
of water, 247–48
profit shifting, 18, 19, 21, 24
Project Backbone, 289
Project Braveheart, 293–98, 317–18, 368, 412
see also Enron Broadband Services
Project Nahanni, 157, 160
Project Notre Dame, 391–405
Project Raptor, 305–9, 312, 316–17, 323–24, 354–57, 362–64, 366–68, 370, 373, 413, 417
see also Bobcat, Porcupine, Talon, Timberwolf
Project Summer, 260–61, 262–63, 315, 333
Project Tanya, 128
Prudential Securities, 102, 244, 348, 359
PSI Net, 332
Public Citizen, 254
Puerto Rico, 158
Puget Sound Power & Lighting, 271
Pulliam, Rebecca, see Mark, Rebecca
Pursuit of Happiness, The (Kelsey), 194
puts, 37
qualifying facilities (QFs), 166–67
Qualitech, 130
Questia, 344
RADRs, 167–69, 174, 365, 412
Ramsey, Mike, 418–19, 422
Rand, Ayn, 214, 253
Rand, Paul, 174
Raptors, see Project Raptor
Rawhide, 157, 400
Raymond, Lee, 241
Reagan, Ronald, 48, 419
Reed, Ralph, 174
Riker, Paula, 420
related-party transactions, 229, 322, 323, 331, 372
Reliant, 277, 355
Reminiscences of a Stock Operator, 219
Republican party, 85, 87, 96, 139, 173, 372
Resources for the Future, 87
retail energy business, 64, 138–39
retail energy market, 302, 369
Reuters, 281
Reynolds, Glenn, 238
Rhythms NetConnections, 191–95, 305
Rice, Ken, xv, 65, 105, 107, 122, 138, 215, 325–26, 337, 345, 351, 415
departure of, 335, 349
earnings and wealth of, 187, 333, 397
at Enron Broadband Services, 61, 171, 186, 213, 243, 287–92, 294, 298–99, 301, 332–35, 420
at Enron North America, 186, 213
family life of, 186–87
indictments against, 411–12
Martin’s relationship with, 123–24, 186–87, 213
midlife crisis of, 186–87
Rice University,
240, 389
Richards, Ann, 88
Richardson, Bill, 278
RICO, 276
Ricochet, 270, 274, 276, 335
Riley, John, 383
risk management, 114–18, 132
River Oaks Country Club, 100, 367
Roberts, Mark, xvii, 330–31
Robertson Stephens, 244
Robinson, Ed, 255
Rockefeller family, 1
Rogers, Jim, 35
Roosevelt, Franklin Delano, 411
Roy, Arundhati, 79
Royal Bank of Scotland, 203, 205
Rubin, Robert, xvii, 82, 96, 385, 395
Rudden, Kyle, 230
Ruemmler, Kathy, 419–21
Russ, Mark, 51
Ryser, Dan, 68
Sacramento Bee, 267
Sallie Mae, 140
Salomon Brothers, 192
Salomon Smith Barney, 162, 231, 244, 331
Sam Adams beer, 47
Sanders, Donald, 235
Sanders, Richard, xv, 274–77, 278, 335, 405
Sanders Morris Harris, 235
San Diego, Calif., 266, 272
San Diego Gas & Electric, 265, 273, 276
San Francisco Chronicle, 279
San Francisco Giants, 178
Sarbanes-Oxley (corporate-oversight rules), 411, 426
Sawhill, John, 9, 12
Schilit, Howard, 231
Schorr, Bob, 119, 120
Schroder & Company, 244, 259
Schwarz, Angela, 359
Schweiger, Jim, 350
Seattle, Wash., 293
Secrest, George “Mac,” 421
securities analysts, 155, 230–35, 236, 243–44, 296, 299, 320, 326, 331, 348–49, 353, 368, 387, 393, 396, 407
Securities and Exchange Commission (SEC), xxi, 41–42, 57, 104, 127, 145, 146, 207–8, 303, 307, 312, 321, 329, 358, 359, 367, 369, 390, 410, 413–14, 427
Enron investigated by, 371–72, 375, 381, 382–83, 390, 393–94, 410
Enron Oil investigated by, 20, 24
Enron’s filings with, 324, 354, 357, 394, 399–400, 401–2
Merrill Lynch charged by, 410
securitization, 66–67, 133, 136, 149, 157, 158, 261, 331
Segnar, Sam, 11–12
Seidl, Mick, xv, 19–25, 423
sell reports, 320
Senate Permanent Subcommittee on
Investigations, 159, 407
September 11 attacks, 362–63, 375, 385
Sera, Sherri, 329, 347
Seven Habits of Highly Effective People, The (Covey), 58
Shankman, Jeff, 241
Shapiro, Marc, xvii, 162, 340, 404–5
shareholders, dilution of, 150, 154
shareholders’ equity, 370
Shelby, Richard, 426
Shell, 112, 391
Sherriff, John, xv, 216, 217, 222–23
Shipman, Todd, 116, 323
short sellers, 258, 325, 341, 374
Shred-It, 383
Sierra Club, 254–55
Sierra Pacific, 316
Silicon Valley, 271, 412
Silverpeak, 269
Simmons, 233
Simon Property Group, 178, 191
Simpson, O. J., 417
Sithe Energies, 60–61, 62, 67, 105, 123, 213, 218
Siurek, Ryan, 323–24
60 Minutes, 417
Skilling, Betty, 28–29
Skilling, Jeff, xiii, 3, 27–43, 45, 59–69, 141, 157, 192, 222, 232, 235, 237, 281, 290, 301, 302, 335, 344, 399, 408, 413, 416–24, 428–29
accounting practices of, see mark-to-market accounting
appearance and personality of, 28, 101
arrogance of, 31, 32–33, 44, 241, 245,
345
on Azurix, 250, 251–52, 255–57, 259–63
background and childhood of, 28–29, 72, 73, 319
“big enchiladas” of, 171, 184, 262, 263
on broadband, 171, 184–88, 255–56, 262, 284–86, 288, 298, 299, 314–16, 331–32, 338, 340, 349
business strategy of, 255
Carter’s relationship with, 310, 327, 345, 348
CFO search by, 140
Commonwealth Club pie incident and, 335–36, 339
confidence of, 337
contempt for Washington of, 173
as COO, 100–102, 104–13, 114–15, 118–29, 131, 139, 171, 332, 338, 384
COO search by, 342
creativity and original thinking prized by, 119
daredevil expeditions led by, 122, 123
Darwinist worldview of, xxiii, 31, 55–56, 62, 64, 332
denials of knowledge by, 324, 416
as deregulation advocate, 265, 327
distress and depression of, 337–39, 346
drinking of, xxiii, 338–39, 418
earnings and wealth of, 30, 100, 240, 313, 347, 350
education of, 29–31
on EES, 171–72, 175–76, 177, 179–80, 182, 184
on Enron bankruptcy, 414
as Enron CEO, 313–36, 337–43, 345–46, 350–51
on Enron stock, xxv, 242, 326–27, 410
family life of, 68–69, 314–15, 325, 339, 347, 349
Fastow and, 134, 137, 138–39, 140, 150, 152, 154, 168, 190, 192–93, 199, 200, 205, 210–11, 305, 307, 328–29, 333, 364, 377, 414
as gambler at heart, 28, 30, 217
Grubman confrontation of, 325–26
homes of, 123, 348
income and wealth of, 35, 69
intelligence as value of, 28, 31, 32, 34–35, 44, 55, 68, 114, 120
“klieg-light syndrome” and, 120
as libertarian, 31
on LJM, 310, 311, 312, 328–29
at McKinsey, 12, 31, 32–35, 55, 66, 68, 233
as manager, 28, 55–57, 101–2, 107–8, 114, 127, 164, 233, 247
Mark’s conflicts with, 71, 88–89, 100–101, 110–13, 180, 246–47,
250, 255–56, 258, 259–63, 315,
326
marriage collapse of, 100, 101, 349
misleading statements by, 321–22, 323, 325
Policy Committee formed by, 328
positive public statements of, 121, 126, 133, 177, 303, 315, 340
on Raptor restructuring, 324
recklessness of, 285
reputation of, 70, 230, 246, 258, 408
resignation as CEO by, 337, 342–43, 346–54, 355–56, 357, 361, 363, 372, 379, 380, 389
return considered by, 389–90
on Rhythms deal, 191
on share buyback program, 105
start-up mentality of, 56–57, 61, 101
stocks sold by, 320, 345, 416, 420
theories of, 233, 240, 244
on those who “got it” and those who didn’t, 233
trading operations of, 70–71, 73, 78,
93, 212–14, 216–19, 222–23, 225–26, 228
in wake of Enron collapse, xxiii–xxv
as workaholic, 68–69
Skilling, Jeffrey (son), 314, 339, 350
Skilling, Kristin, 325, 343
Skilling, Mark, 314, 327, 350
Skilling, Sue (sister), 29
Skilling, Susan (first wife), xv, 30,
68–69
Skilling, Tom (brother), 29
Skillingites, 57, 105, 328
Skytel, 175
Smith, Rebecca, xvii, 246, 360, 364
Smith, Sherron, see Watkins, Sherron
Smith, Tracy, 187
solar energy, 174
Soros, George, 74
South Africa, 74
South America, 75, 112, 259, 325
Southampton Place partnership, 196–97, 206, 297, 311, 355, 376, 394, 411
Southern California Edison, 167, 265, 277, 278, 280
Southern Methodist University, 29, 312
South Korea, 258
Southwest, 18, 19, 21, 23
Southwestern Baptist Theological Seminary, 385
Spacek, Leonard, 144
Spain, 339
&nbs
p; special-purpose entities (SPEs), 149, 151, 157–58, 161, 166–67, 189, 191, 209, 229, 259, 290, 293, 305, 310, 316, 317, 354, 360, 380, 383, 384, 400, 409
see also specific entities
Spindletop, 1
spot market, 265–66
Stamford, Conn., 409
Standard & Poor’s, 98, 102, 105, 116, 125, 131, 206, 229, 236–38, 319, 323, 380, 394, 395, 400, 403, 407
Stanford Business School, 21, 214
Star Wars, 67, 134, 168, 189
Starwood, 181
State Bank of India, 164
Stead, Ed, 292
steam, 49
steel trading, 225
Stewart, John, xvi, 317–18, 363
Stewart, Martha, 413
stock issuance, 150, 341
stock market, 30
growth rewarded by, 41
increasing earnings rewarded by, 18
stock options, 12, 37, 47, 100, 138, 414, see also specific individuals
Stoel Rives, 274, 276
Stram, Bruce, 14
Strauss, Bill, 11, 12–13
streaming programming, 287
structured finance, 149, 238, 324, 380
Stulb, David, 383
Suez Lyonnaise des Eaux, 113, 247–48
sugar futures, 226
Sulentic, Steve, xiv, 18–19, 21
Sunbeam accounting scandal, 145
Sun Microsystems, 93, 243
Sun-tzu, 58
supply and demand, 268, 269, 273, 280
Supreme Court, U.S., 406
Sutton, Joe, xv, 111, 112, 247, 262
Swartz, Mimi, 358
Taco Bell, 176
take-or-pay agreements, 51, 103
Talon, 306–9
Tangier, 254
taxes, corporate, 87
TCEE (total consumer energy expenditure), 179
TCV (total contract value), 178–79
team players, 55, 56, 63
Techboard, 117
Teesside power project, 44, 48–54, 73, 75, 78, 79, 80–81, 93, 102–3, 175, 346
telecommunications, 185, 186, 231, 288, 315, 318, 320, 331
Temple, Nancy, xvi, 368–69, 381–82,
406
Tenneco, 402
Texaco, 16–17
Texas, 2, 11, 46, 174
banking crisis in, 36
as growth market, 11
Texas, University of, 57, 141, 153, 390
Texas A & M, 57, 146
Texas Commerce Bank, 162
Texas Journal, 319
Thailand, xxiv, 130, 131
Thatcher, Margaret, 48
TheStreet.com, 331
Thomas, Brownlee, 244
Thorn, Terry, 55
Thunderbird, 293
Tilney, Beth, xv, 190, 360
Tilney, Schuyler, xvii, 190, 200, 207, 234–35, 360, 370, 381, 410–11
Timberwolf, 308
Times of India, 81
Tirello, Edward, 229
Today, 416
Toronto Dominion bank, 152
total contract value, 178–79
total return swaps, 158
Tourre, Fabrice, 427
traders, trading, 42, 43, 85, 125–26,
151, 212–28, 283, 316, 324, 326, 330–31, 333, 334, 335, 338, 339,