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- WORLD
Enron a cocktail of money, sex and fast living
More than two thirds of Americans now believe that the Bush administration is either hiding something or lying about its relationship with Enron, according to a CBS-New York Times poll. Philip Delves Broughton in Houston investigates the culture that led to the energy giant's collapse.
Enron was a company in love with itself. Office affairs were rampant, divorce among senior executives an epidemic, and stories of couples steaming up glass-walled offices after late night meetings were the talk of Houston.
"It was insane," says a former energy trader, soothing her financial injuries with a margarita. "There were no rules for people, even in our personal lives. Everything was about the company and everything was supposed to be on the edge - sex, money, all of it."
But the music has suddenly stopped. Savings and pensions have been wiped out, careers destroyed and America's version of free-market capitalism has been dragged into the interrogation room.
The reverberations of Enron's collapse will be felt for years in Washington DC, where the political witch-hunt is gaining pace, and on Wall Street, but nowhere more so than in Houston, which offered Enron a stage for its gaudy act.
From the mid Eighties, when Enron was created by the merger of two energy companies, Houston became Enron's town. The company filled the void left by the oil companies, whose buccaneering days had been ended by the collapse in oil prices.
Boss's mansion decorated in black and white
In River Oaks, the smartest suburb of Houston, home to the likes of the former president, George Bush, Enron executives began building huge mansions. Jeff Skilling, the executive who transformed Enron under Lay's more genteel rule, decorated his house entirely in black and white, Enron's corporate colours, from the marble, to the sofas, to the flowers, wallpaper and pictures. The Enron Wives became known around town for their Mercedes, fur-trimmed sweaters and soft leather trousers.
But in the excitement, Enron lost touch with its mortality. Skilling wanted it to become an alternative to the Wall Street banks. He wanted to recruit the best, which meant persuading the leading business school graduates, from places such as Harvard and Stanford, to choose Houston over New York or Silicon Valley.
He did so by creating the same culture of unselfconscious greed and reward which Wall Street was forced to suppress by the insider-trading scandals of the late Eighties. He built his own Bonfire of The Vanities in Houston and everyone wanted to feel its warmth.
'Rank or yank'
Managers employed a system know as "rank or yank". Every employee's performance was ranked 1-5. Five meant you were out. The bottom 15 per cent of workers were fired each year. For the best workers, however, the incentives were staggering. Bonus day was known at the company as Car Day, because of the lines of extraordinary sports cars arriving for the most successful employees.
To the outside world, Enron described itself as a family for which employees were delighted to work punishing hours. Inside it became increasingly incestuous, both sexually and financially.
While the accountants came up with schemes for Enron to credit itself with vast and phoney profits to look good on Wall Street, the traders and consultants, often new to Texas, found themselves immersed in an Enron-only culture.
Wild bets
Only those at the top and the traders who saw the kinds of wild bets Enron was placing, on everything from oil to the weather, saw how precarious the whole thing was. They knew it was a house of cards and began pulling out as much money as they could.
The best brains began demanding vast salaries to stay, and to save face, Skilling paid them. Then they asked for more. Senior executives began selling their shares in huge blocks. Everyone at the top was cashing out while those further down believed the hype.
"We all thrived on the buzz," said Mark Lindquist, 39, a web designer who lost his pounds 39,000-a-year job and is now struggling to pay for his autistic son's treatment. "It seemed like we were part of something incredible and Enron sold us these great corporate values."
London Telegraph
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