Enron end run: whistleblower Sherron Watkins's tell-all doesn't quite add up

Washington Monthly, May, 2003 by Marianne Lavelle

POWER FAILURE: The Inside Story of the Collapse of Enron by Mimi Swartz, with Sherron Watkins Doubleday, $26.00

THE MOST EXCRUCIATING MOMENTS in Power Failure: The Inside Story of the Collapse of Enron, involve a humiliating salsa-making class and a heart-pounding cross-country ski trek one bitter cold Aspen night. Yes, behind the bad investments, the complex hedging vehicles, and the conflicts of interest that sunk the energy trading behemoth lay these curious scenes of rich executives at play. Nasty, malicious play.

Power Failure is the long-awaited portrait of the company's unraveling through the eyes of Sherron Watkins, the renowned Enron whistleblower, written by award-winning Texas Monthly journalist Mimi Swartz. We get a sense of Watkins as a woman apart from her colleagues early on in the story; when she recounts the seemingly trivial recreational activities planned at company management conferences. As it turns out, careers at Enron rose and fell on petty considerations such as the choice between fly fishing or tennis as an afternoon social activity. It wasn't always easy to navigate the shoals between winnerdom and loserdom; how was Watkins to know that three hefty guys from Enron's old, out-of-favor natural-gas pipeline division would show up for the same salsa-making class she had signed up for? Soon-to-be chief executive Jeff Skilling pokes his nose in the door, as if smelling something bad, and retreats after letting Watkins know that he's seen her.

Then there was the trauma on a snowy trail after dark during an Enron business trip in Colorado. The book contains a priceless photo from this weekend, of Watkins, Skilling, and Andrew Fastow, chief financial officer and schemer, decked out in sunglasses and ski suits, with the majestic Rockies rising behind them. But their smiles of camaraderie belie tension in the mountain air. Fastow and another executive race ahead and leave Watkins behind, alone and inadequately clad for the cold, on a cross-country ski trek across a desolate field to a fancy restaurant. Watkins briefly frets that she will become "the first person in Enron history to succumb to perk death."

Imagine a corporation run by the meanest kids from high school. The ones who were able to claw, cheat, or charm their way to the top of the class, as long as it was a relatively average class. For all its talk of "Enron smart," the company never attracted the cream of the crop from the Ivy Leagues; its business was too obscure, and located in Houston, of all places. Instead, it drew its talent from a peculiar pool of Midwestern overachievers. It was important, in this bunch, to run with the right clique (the traders, not the asset managers). Competition was brutal, not only over deals, but over "deal toys," obscenely expensive crystal knickknacks purchased from Neiman Marcus to commemorate such triumphs. Grown executives would hyperventilate over the pressure to stage the best skit at a company dinner. In his heyday, Skilling once ruminated over a new motto for Enron, "the world's coolest company."

Watkins and Swartz paint a compelling picture of a company too obsessed with maintaining its cool style to actually get around to running a business of substance. Yet one waits in vain throughout the book for some sense of Watkins's inner struggle, her transformation from aspiring Enronite desperately seeking to reel in a big deal to the woman who wrote the dead-on memo predicting that the company "will implode in a wave of accounting scandals." Her experiences are recounted in the third person, with detachment. Watkins, it seems, would allow only so much self-scrutiny or exposure.

Though Sherron Watkins is obviously the greatest resource that this book enjoys, the book tries desperately not to be the Sherron Watkins story. The jacket informs the reader that the authors have conducted "hundreds of other interviews" and seek to tell a full narrative of Enron's rise and fall. This is somewhat unsatisfying, since much of this story has already been told, ad nauseam, in the press. Because the authors provide no footnotes, and because most of their sources remain anonymous, it is impossible for the average reader to distinguish what information has already been reported and what is new. In fact, there are no blockbuster revelations that add significantly to the known narrative of Enron's demise.

The authors also seem shaky when they venture into what admittedly is the most difficult task for anyone writing about Enron: an explanation of its fatal accounting shenanigans. Swartz and Watkins opt to assume that the reader understands what it means "to price some put options ... at the current stock price for a six-month, period," and grasps the significance of the time when Enron "barely rolled its commercial paper" But by doing so, they limit their audience. Contrast their approach with the Enron coverage of The Wall Street Journal, which despite its financially sophisticated readership, never hesitated to spend a few words on a simple, step-by-step explanation of the company's fiscal mischief. As a result, it was better able to convey to all readers the drama of these ill-fated transactions.