The sudden collapse of Enron, culminating in what was then the largest bankruptcy filing in US history on December 2, 2001, changed the lives of thousands, damaged investor confidence to the core and made household names out of previously unknown businessmen.
Many have been dragged before congressional committees and reprimanded in seemingly endless hearings. Some of them were later accused, arrested and shown in front of the cameras handcuffed as part of the national catalyst. Twenty years later, the last of Enron’s defendants had completed their prison sentences, paid their compensation and sought to move on with their lives.
So far, only a few dozen or so people we spoke to for this article have been willing to speak publicly about their time at Enron. Several said they saw “no improvement” in reconnecting themselves with the company, preferring instead to stay out of sight. More than one person said that even two decades later, the account of the experience was very emotional. One former executive said he would need time to “decompress” after a 1 hour and 20 minute phone conversation about Enron — most conversations with Enron alumni are long.
All of the former company leaders CNBC spoke with still fondly remember their time at Enron, as do many of the thousands of employees who may still blame them for the collapse of what everyone seems to agree is a special place to work.
Former Enron President Kenneth Lay (center) leaves US Court of Bob Casey after today’s proceedings at his fraud and conspiracy trial, April 26, 2006, in Houston, Texas.
Dave Ensel | Getty Images
Enron’s founder and chairman, Kenneth Lay, was not spared the scandal. Shortly before Enron’s collapse, he was riding high—a local Houston champion who was rumored to have been in line for a position in the new George W. Bush administration. Lay had deep ties to the Bush family, whom President Bush II dubbed “Kenny Boy.”
Convicted of 10 criminal charges in 2006 – a verdict he said at the time left him “shocked” – Lay died of a heart attack six weeks later while awaiting sentencing. Because he never had the opportunity to appeal the verdict, the court overturned his conviction.
Lay’s daughter Elizabeth, a lawyer who worked on his defense team, and son Mark, a former Enron vice president who still works in the energy industry, remembered what they said had been multiple beginnings at Enron under their father’s leadership, in areas including renewable energy, environmental stewardship, and support for minorities and the disadvantaged.
“The model was simple, hire the smartest people you can find, give them capital and run their back office so they can build new markets,” they said in a statement to CNBC.
Former Enron CEO Jeffrey Skilling testifies before the Senate Committee on Commerce, Science, and Transportation on February 26, 2002 on Capitol Hill in Washington, DC.
Stephen Jaffe | AFP | Getty Images
Former CEO Jeffrey Skilling, a one-time McKinsey consultant who developed Enron’s “asset light” business model with a focus on market-making businesses like trading natural gas instead of traditional pipelines, completed a 12-year prison sentence in 2019. His sudden resignation after just six months as CEO in 2001 raised some of the first doubts about the problems at Enron.
Skilling, who declined to comment for this story, served the longest sentence of any Enron defendant, convicted along with Lay on 19 counts including fraud, conspiracy and insider trading. He has consistently maintained his innocence, but dropped his remaining appeal in 2013 as part of an agreement with the Department of Justice that led to his early release from prison.
He was originally sentenced to 24 years in prison, but a federal appeals court ruled that the sentence was excessive and returned the case to the trial judge for re-sentencing. In 2013, Skilling and the Department of Justice agreed to jointly recommend a 14-year prison sentence in exchange for Skilling dropping his remaining appeals. With good behaviour, this meant Skilling was released about 12 years later.
Today, Skilling is back in Houston, where he works for energy company Veld Applied Analytics. According to its website, the company is developing “advanced analytical tools to create and monitor the valuation” of oil and natural gas assets.
Richard Cosey, the former chief accounting officer who was due to stand trial alongside Skilling and Lay, but agreed to plead guilty a few weeks before the trial began, spent nearly five years in prison and was released in 2011. Today, he, too, is back in Houston , where he runs a specialized financial advisory firm. Cozy also declined to comment.
Andy Fastow, the former chief financial officer, was one of the few former CEOs willing to discuss their experiences. Fastow, who created some of Enron’s most notorious off-balance sheet transactions and made millions in the process, eventually pleaded guilty to two counts of fraud. He was a star proof witness against Skilling and Lay, and served five years in prison.
He, too, declined to be interviewed, but gave a statement marking the 20th anniversary of the Enron bankruptcy.
“I believe what I did was wrong, immoral and illegal. I take full responsibility for my actions. I feel ashamed and embarrassed every day of my life. For those who have been affected by my actions, directly or indirectly, I apologize, I do not expect you to accept my apology, but you deserve to hear it.” “.
Former Enron Chief Financial Officer Andy Fastow accompanies a US Field Marshal of Federal Court Bob Casey in Houston, Texas after his fourth day of testimony to the government in the fraud and conspiracy trial against Jeff Skilling and Ken Lay on Monday, March 13, 2006.
NS. Carter Smith | Bloomberg | Getty Images
Since his release from prison in 2011, Vastu has worked on the lecture circuit, giving unpaid talks to business groups, fraud investigators, and college classes. Oftentimes, he displays his Federal Bureau of Prisons identification card in one hand and the “Chief of the Year” trophy he won again in the other. His message: Even though companies and CEOs may think they’re following the rules, they’re still breaking the law as he did. Misleading deals like the one he struck at Enron are still common in business, Vastu says, and they are still celebrated.
Fastow said in an excerpt from one of his speeches posted online by BigSpeak Speakers Bureau, where the prevailing rate for Fastow speech listed at $10,001 – $20,000.
Enron Vice President of Corporate Development Sherwin Watkins (left) watches former President and CEO of Enron Jeffrey Skilling (right) testify before the Senate Committee on Trade and Transportation Sciences on February 26, 2002 in Washington, DC.
Mark Wilson | Getty Images
Another former Enron executive who drew on her experience in the speaking and consulting profession said that from what she’s seen, Vastu still doesn’t understand her.
“The CFO of the Year award is the same information that investors and employees have, while the Department of Justice has subpoena power and can get to the root of the transaction, so this is a misrepresentation,” former Enron Vice President Sherwin Watkins said in an interview. . “I am conflicted about his message because he talks about principles over specific rules. He gives a good message, but he acts as if he is a victim of ambiguity and accounting rules while in fact looking for ambiguity in the rules in order to force the outcome he wants.”
Watkins, who had informed Vastu at one point, brought her concerns about Enron’s accountability to Lay after Skilling’s resignation. When her memo to Lay was made public during a congressional investigation, she gained fame as the “Enron Whistleblower.”
After testifying before Congress and at the Skilling and Lay trial in 2006, Watkins became a spokesperson and consultant for the company, though she said the consulting work never took off.
“I think companies hear very well my story, one-way communication,” she said. “I was never set up for two-way communication.” “For whatever reason, I make them uncomfortable.”
Today, she still gives speeches, teaches, and works as a resident executive at Texas State University.
“Ethics should be taught as a skill like accounting, where you really go through all the different dilemmas you might have,” she said.
While Watkins is usually described as a whistleblower, she hasn’t taken her concerns outside of the company. She said it was because there was no significant mechanism for employees to do this in 2001. She is proud of the fact that there are now corporate whistleblower protections, including the Securities and Exchange Commission’s Whistleblowing Office that was set up after the 2008 financial crisis .
“They’ve already generated more than $1 billion in bonuses in the 10 years he’s been working,” she said.
Assistant US Attorney and Enron Chief Prosecutor Leslie R. Caldwell speaks to the media on October 16, 2002 in Houston, Texas.
George Wong | Getty Images News | Getty Images
While the most prominent Enron executives have kept a low profile over the past 20 years, some members of the government team that investigated the collapse have seen their careers skyrocket.
Soon after Enron collapsed, amid public outrage, and insistence that the US Attorney’s office in Houston had too many conflicts of interest related to Enron (as did then-Attorney General John Ashcroft, who stepped down from the investigation), George W. The Bush administration set up an Enron task force to investigate the company.
Leslie Caldwell was the first female director of the task force, who cut her teeth at an organized crime trial in Brooklyn, New York, and introduced many of the same tactics to the Enron investigation.
Caldwell, who secured the Vastu and Skilling indictments, and obtained the pivotal plea of guilty from Fastow, would go on to head the criminal division of the Obama administration’s Department of Justice. Today, she heads up white collar defense training as a partner at Latham & Watkins in San Francisco.
In an interview, Caldwell said she’s proud of the task force’s work, which she said has helped make a lasting impact on corporate accountability.
“It changed the culture in a lot of companies across the country,” she said. “Compliance, which was the kind of back-office job that nobody really paid attention to, became huge.” “I also think it sent a very strong message about corruption in the leadership ranks and how it can be avoided at all costs.”
Her successor as Enron team director, Andrew Wiseman, will become the top attorney general in former FBI Director Robert Mueller’s investigation into Russian interference in the 2016 election. Today, he is a faculty member at New York University, and a legal analyst for NBC News.
Weissman was followed as director by Shawn Berkowitz, who was the lead prosecutor in the Skilling and Lay trial. He is now the global head of the complex commercial litigation practice at Latham & Watkins in Chicago, and has represented high-profile white-collar defendants including “Full House” actress Lori Loughlin in the Operation Varsity Blues College admissions scandal.
Deputy Task Force Director Kathryn Rummler will continue to serve as White House counsel in the Obama administration. Today, she works as a general counsel at Goldman Sachs.
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