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Conspiracy of Fools by Kurt Eichenwald (Broadway Books, 742 pages, $26) The Enron scandal can be viewed from lots of perspectives. It can be defined as a case of lax business ethics, something that occurs in lots of profit-oriented corporations, although perhaps not to the same extent as at Enron. Or it can be regarded as a case of amoral personal behavior. This explanation of the scandal — the bad-apples-in-a-barrel scenario — contends that many, perhaps most, Enron employees acted honestly, unaware of certain well-disguised activities of a few. Or it can be depicted as a legal drama, with federal regulators and U.S. Justice Department attorneys hoping to punish lawbreakers in such a manner that the case will act as a deterrent to illegal behavior in other corporations. Given its cast of characters, to view the scandal as a legal drama is no stretch of the imagination. At President George W. Bush’s Justice Department, then-Attorney General John Ashcroft was among the players, as was then-Deputy AG Larry Thompson, and the former Criminal Division chief Michael Chertoff. They were joined by Leslie Caldwell and Andrew Weissmann, director and deputy director of the Justice Department’s Enron Task Force. Also within the Justice Department, Federal Bureau of Investigation Director Robert Mueller and Special Agent Joseph Ford played their roles. At the Securities and Exchange Commission, the saga straddles the tenures of two chairmen — Arthur Levitt and Harvey Pitt — plus two directors of enforcement — Richard Walker and Stephen Cutler. Linda Chatman Thomsen, deputy director of enforcement, was involved throughout the scandal, as were SEC Fort Worth Regional Office staff members Spencer Barasch and Robert Hannan. No legal drama would be complete without high-priced private practitioners — in this case they emerge from the firm once known as Wilmer, Cutler & Pickering in Washington, D.C.; Weil, Gotshal & Manges in New York City; and Vinson & Elkins in Houston. James Derrick, Rob Walls, and Rex Rogers of the Enron legal department had lots of questions to answer, coming from all sides. As the Enron scandal continues its reverberations, as guilty pleas and tales of trials to come mount, the list of books about the case grows longer. No wonder, with so many lawyers having their say. In 2003, the fruits of respected investigative journalist duos reached the bookstores twice. First came Rebecca Smith and John R. Emshwiller, with 24 Days: How Two Wall Street Journal Reporters Uncovered the Lies That Destroyed Faith in Corporate America. The book topped out at 400 pages. Three months later, Bethany McLean and Peter Elkind from Fortune magazine clawed for readers’ attention with The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, weighing in at 435 pages. By then, readers could choose not only from these two accounts but also from at least two dozen previous Enron books. Because the legal proceedings had not run their course by the end of 2003, additional Enron books seemed inevitable. Although the projected trial of Enron progenitor Kenneth Lay is not scheduled to open until fall 2005, Kurt Eichenwald and his publisher decided against waiting. Hence, Conspiracy of Fools: A True Story hits the bookstores this month. The New York Times reporter — who lives in Dallas not the Big Apple year-round and is the author of two previous masterful investigative books — takes 742 pages to share his version with an audience that might or might not be hungering for a more-detailed account of the Enron affair than has ever before been offered. (Eichenwald’s publisher quite likely is worrying about the “might not be hungering” category. How else to explain the omission of the word Enron from both the book’s title and subtitle?) Forty of those 742 pages consist of copious source notes, a blessed collection of information for readers who care to discern how Eichenwald knows what he says he knows. (The Smith-Emshwiller and McLean-Elkind books regrettably lacked copious source notes.) A few of Eichenwald’s source notes even mention the previous books, a wise decision given that the reporting appearing in The Wall Street Journal and Fortune became an integral part of the Enron scandal atmosphere. THE STORY IS THE STORY Does Eichenwald’s book break important news about the Enron case? Not for those who have been following the daily newspaper, broadcast, and Web reports. But breaking news does not seem to be Eichenwald’s point. Rather, his point is to offer a comprehensive, compellingly written narrative that employs novelistic techniques while never straying from the facts, if not the truth — whatever that truth might be among the thicket of conflicting stories. Well-written narratives are grounded in specific scenes. Eichenwald opens his book with a scene from Oct. 24, 2001, as the illegal and/or unethical machinations behind the accumulation of Enron’s riches are becoming public. In the scene, Lay is easing his black Mercedes 600 SL out from its reserved parking spot at the Huntingdon condominiums in Houston, driving to the office earlier than usual, taking Kirby Drive, “the tree-lined road that served as a main thoroughfare through River Oaks, Houston’s wealthiest and most prestigious neighborhood.” From there, putting the neighborhood’s “elegance” in his rearview mirror, Lay enters Allen Parkway, “a winding stretch of road that offered the most direct route downtown.” The sun is rising “behind a glittering glass and aluminum tower that defined the architectural rhythm of Houston’s skyline. It was the headquarters of Enron, his Enron, the once obscure pipeline company that in a matter of years had been transformed into a politically connected energy colossus.” Get the picture? Eichenwald is using a you-are-there approach, and for the most part he uses it skillfully. Still, maintaining a narrative arc while weaving all the significant players into that narrative is nearly an impossible challenge. The most memorable narrative journalism tends to focus on one character throughout the text. Eichenwald lists 146 human beings in his helpful “Cast of Characters” at the front of the book. No matter how skillful the author, that is too many for a narrative to maintain its desired compelling level throughout. So the narrative will probably drag in spots for all but the most directly involved readers — say, the 146 folks listed. For the most part, though, the book succeeds as storytelling. After the opening scene featuring Lay, Eichenwald moves several decades backward, relating the founding of Enron, then following the company’s evolution year by year. The narrative does not return to October 2001 until it passes page 500. The chronological approach, though sounding unimaginative, is a wise organizing principle for such a complex corporate history. Eichenwald is able to demonstrate cause and effect through chronology: This happened and, as a result, that happened. Eichenwald says he interviewed more than 100 of the players. The rest of the sourcing is heavily dependent on interviews by FBI agents who took notes, testimony in front of federal grand juries and the SEC, personal diaries, newspaper and other periodical coverage, and, of course, all those previous books. All that sourcing makes for a good mix of accounting shenanigans, prosecutorial decisions, sexual innuendo, marriages in trouble, marriages that survived, and — above all — greed, greed, and more greed. Although the book is more micro-history than macro-history, more reportage than theory, Eichenwald does share valuable conclusions on a few of the many pages. He writes:
The Enron debacle set off what became a cascading collapse in public confidence, sealing the final days of an era of giddy markets and seemingly painless, riskless wealth. Soon Enron appeared to be just the first symptom of a disease that had somehow swept undetected through corporate America, felling giants in its wake from WorldCom to Tyco, from Adelphia to Global Crossing. What emerged was a scandal of scandals, all seemingly interlinked to some mindless spree of corporate greed.

Perhaps the most valuable lesson for the general public imparted by Eichenwald is just how preventable the unethical and illegal activities were. Enron’s corner cutting did not occur overnight. Individual investors, stock analysts, government regulators, and journalists all noticed signs of trouble, but could not overcome the twin cultures of self-imposed ignorance (Enron is too complicated to really figure out) and the aforementioned greed. Lawbreaking was just one of many elements that brought Enron low, Eichenwald says. “Shocking incompetence, unjustified arrogance, compromised ethics, and an utter contempt for the market’s judgment all played decisive roles. Ultimately, it was Enron’s tragedy to be filled with people smart enough to know how to maneuver around the rules, but not wise enough to understand why the rules had been written in the first place.” Eichenwald believes that new cycles of corporate corruption will occur. Given the profit-taking mentality of institutional investors, the who-gives-a-damn attitude of beholden congressional majorities, government regulators blindly committed to deregulation, White House advisers intent on coddling the wealthy, and a president born to upper-class privilege, Eichenwald is probably correct. Steve Weinberg is an investigative journalist in Columbia, Mo.

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